Pensions - Articles - Government denied right of appeal on pensions ruling

Rosalind Connor, Partner at ARC Pensions Law comments following the news that the UK government is facing costs of £4bn a year after being denied leave to appeal against a landmark ruling that pensions reforms discriminated against younger workers,

 “The Court of Appeal ruling on this matter had far-reaching effects for government policy on pensions and so it was expected that the government would appeal. Without leave to appeal, the government is faced with implementing the ruling.

 The government had followed what has been common practice in the private sector when closing defined benefit pension schemes – it is accepted that the effects of pension scheme closure are often hardest on those closest to retirement, who don’t have time to save enough to make up the difference, particularly when leaving a final salary scheme, where the last few years are the most valuable. As a result, many employers have tended to give a “softer” close to those members closest to retirement, where they continue in the more generous scheme for a period longer than the younger members.

 In this case, the court held that there was not sufficient justification for this softer close, so the government must approach a close in a different way, possibly reversing some significant steps taken to reduce the cost of public sector pensions by moving younger staff out of the final salary schemes.

 Ironically, the steps taken in both professions towards diversity have added another argument against the government in this case.

 Because of those steps, there are a greatly increased number of younger members who are women and/or BAME. This added another argument that the differentiating between younger and older members was indirect sex and race discrimination, as the vast majority of those benefiting from the more attractive pensions for older workers were white men."

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