Government faces £4 billion annual pensions bill as Supreme Court rejects appeal

Tom Selby
27 June 2019

The Supreme Court has refused an attempt to overturn a pensions age discrimination ruling in a move which could cost the Treasury £4 billion a year.
The case centres on transitional protections provided to older public sector workers as part of reforms introduced in 2015.
In a decision published in December 2018, the Court of Appeal ruled the protections – which ensured older scheme members could continue to benefit from the previous, more generous arrangements – discriminated against younger employees.
The Supreme Court has now confirmed an attempt to appeal the ruling has been rejected.

Tom Selby, senior analyst at AJ Bell, comments: 

“Members of public sector schemes look set to receive a huge retirement boost after the Supreme Court refused to hear the Treasury’s appeal in this landmark age discrimination case. 
“The transitional arrangements introduced alongside reforms to public sector schemes back in 2015 were designed to appease trade unions. This concession has now come back to bite the Treasury in the backside to the tune of £4 billion a year.
“While for those affected this is clearly great news, it could not have come at a worse time for the Government. 
“With Brexit leering over Whitehall like a Dementor, sapping the life out of every department approaches, the last thing a new Prime Minister – and most likely a new Chancellor – wants to find is a ready-made black hole in the nation’s finances.
“As is always the case when cash is sucked out of public coffers, options are limited: spend less, borrow more or cross your fingers and hope economic growth bails you out of trouble.”

Background

A summary of the Court of Appeal ruling can be found here: https://www.judiciary.uk/wp-content/uploads/2018/12/lord-chancellor-v-mcloud-and-ors-summary.pdf
And the full judgment is available here: https://www.judiciary.uk/wp-content/uploads/2018/12/lord-chancellor-v-mcloud-and-ors-judgment.pdf
The latest decision isn’t yet available online but has been confirmed to AJ Bell by the Supreme Court.
The written statement detailing the £4 billion cost to the Government can be found here:https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-01-30/HCWS1286/

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