Government faces £4 billion a year pensions bill in age discrimination row

Tom Selby
30 January 2019

The Government could be hit with billions of pounds in extra pensions costs after the Court of Appeal ruled transitional protections introduced as part of reforms to public sector schemes in 2015 were discriminatory.

The Treasury has today published a written ministerial statement setting out the implications of the ruling made in December last year. 

You can read the statement in full here: https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-01-30/HCWS1286/

In the case, the Court ruled protections introduced to ensure older scheme members could continue to benefit from the previous, more generous scheme structure were age discriminatory.

Tom Selby, senior analyst at AJ Bell, comments:

“Members of public sector schemes could receive a massive boost to their retirement pots if the Government’s appeal against this decision fails. This boost will come at a cost to the Treasury – and taxpayers in general – of somewhere in the region of £4billion a year.

“The implications for the public finances are potentially gargantuan. It is highly unlikely such a hit to could simply be absorbed by the Exchequer, so cuts in spending or increases in taxes will almost certainly be needed to fill this pensions black hole.”

A summary of the case 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

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