Public Service Pensions and Judicial Offices Bill [HL]

Explanatory Notes

Overview of the Bill

1 The Public Service Pensions and Judicial Offices Bill ("the Bill") includes measures that:

a. Address discrimination that arose when existing public service pension schemes were closed to certain members between 2014 and 2016;

b. Deliver changes to public service pension schemes to ensure that all eligible public service workers have access to high quality defined benefit schemes on a fair and equal basis;

c. Ensure there are no reductions to members’ benefits following completion of the cost control element of the 2016 valuations;

d. Improve the terms for judicial resourcing to support the effective functioning of the judiciary, to meet future demands; and

e. Confer powers upon the Treasury to establish a new UK Asset Resolution (UKAR) Limited pension scheme.

2 When reformed public service pension schemes were introduced in 2014/2015 (in each case, a "new scheme") the Government agreed, following discussions with trade unions, to allow active members of pre-existing public service pension schemes (in each case, a "legacy scheme") who were close to retirement to remain in those schemes, rather than requiring them to start to accrue pension benefits in a new scheme. This was called transitional protection.

3 Following a judgment by the Court of Appeal that found transitional protection to be discriminatory in the schemes for the judiciary and firefighters, the Government consulted on proposals to allow all eligible members of the main public service pension schemes a choice between legacy and new scheme benefits in respect of any pensionable service between 1 April 2015 and 31 March 2022, so that they are able to opt for the benefits (new scheme or legacy scheme) of the greatest value to them. Eligible active and deferred members of the main public service pension schemes will be able to make this choice close to the time that their pension benefits are paid when it is clearer which option is most beneficial for them. Some members with relevant service are already in receipt of pension benefits in relation to the affected period. This group will be able to choose which benefits they wish to receive in relation to their affected service once the legislation comes into force and where there is a change in entitlement as a result; any change will apply retrospectively.

4 Separate arrangements are being made in the local government pension schemes because the transitional arrangements in those schemes were made in a different way. Judicial scheme members will make an immediate choice given the unique nature of their legacy schemes. All members of the public service schemes, regardless of age or joining date, will accrue benefits in the relevant new scheme from 1 April 2022. This aims to ensure fair and equal treatment going forward.

5 This Bill recommits to the objectives underpinning the 2015 reforms: fairness between lower and higher earners; value for the taxpayer; and ensuring a sustainable, affordable approach is taken to public service pensions. Measures in the Bill deliver changes that will ensure greater fairness in future public service pension provision and provide members with greater certainty about their benefit entitlement.

6 Taken together, the Bill aims to ensure that public service pension benefits are affordable, sustainable and form part of a generous remuneration package for public servants; it brings forward bespoke measures required to support the judiciary now and in the future; and establishes a new UK Asset Resolution pension scheme.

 

19 July 2021