New Clause 14 - Compensation of losses incurred by closure of legacy schemes

Part of Public Service Pensions and Judicial Offices Bill [Lords] – in a Public Bill Committee am 2:15 pm ar 27 Ionawr 2022.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Simon Clarke Simon Clarke The Chief Secretary to the Treasury 2:15, 27 Ionawr 2022

I thank the hon. Lady for tabling the new clause, which would require the Chancellor to lay a report before Parliament within two months of the passing of the Act setting out how the Government could compensate scheme members who had reached the required number of years to retire with full benefits under the legacy scheme but who would need to continue to work if they wished to retire with full benefits under the reformed scheme. The intention of the new clause appears to be to require the Chancellor to devise a way to compensate scheme members with remediable service for any reduction of future pension benefits resulting from the prospective McCloud remedy legislated for in clause 8, and the difference in pension ages between the legacy and reformed schemes.

The Government received representations made by police staff associations regarding members of the 1987 and 2015 police pension schemes who reached 30 years of service in the legacy pension scheme before reaching minimum pension age in the reformed scheme. Lord Davies of Brixton proposed amendments regarding that issue during the Bill’s passage through the other place; however, by referring to full benefits in the reformed pension scheme, the new clause appears to go considerably beyond the police staff associations’ representations and proposals, effectively requiring compensation for those below normal pension age, not minimum pension age, in the reformed scheme.

Under the Bill, all members in active service will be moved into the reformed schemes in respect of service from 1 April this year onward—that is what is known as the prospective remedy—to ensure that all active members are treated equally from that date onward. For the avoidance of doubt, no legacy scheme member will be unable to access the full value of their accrued benefits in their legacy scheme once they reach the required age or length of service. The vast majority of scheme members will be able to access their benefits in reformed schemes at this point, with a fair actuarial reduction for taking scheme benefits below their normal pension age.

The Government have received detailed representations on the specific issues that the prospective remedy causes for certain members of the police pension scheme. This arises due to the move from the legacy scheme, where retirement is based on length of service, to the reformed scheme, where retirement is based on age. I am grateful for the hard work and extraordinary dedication shown by our police officers. The Government support the police and the important work they do to protect the public, and recognise that the police face changing demands from crime. That is why the reformed police pension scheme is one of the most generous pension schemes in the United Kingdom.

The Government have considered the issues raised by police representatives carefully, including whether there are viable policy mitigations. The Home Office is also considering responses to its consultation on the detailed regulations to implement the prospective McCloud remedy for the police pension scheme, where the issue has also been referenced. The outcome of that consultation will be published in due course. However, the purpose of this new clause goes considerably beyond the specific issues raised regarding the police.

It is important to stress that the Government must not take action that would be contrary to the whole purpose of this Bill: to remove the discrimination identified by the courts and to ensure that all members are treated equally from the first of April 2022 by accruing service in the reformed schemes regardless of their age.