Session 2021-22
Public Service Pensions and Judicial Offices [HL] Bill
WRITTEN EVIDENCE SUBMITTED BY THE POLICE SUPERINTENDENTS’ ASSOCIATION (PSPB01)
PUBLIC SERVICE PENSIONS AND JUDICIAL OFFICES BILL
MEMORANDUM
TO PUBLIC COMMITTEE IN HOUSE OF COMMONS
INTRODUCTION
1. The Police Superintendents’ Association (PSA) represents superintendents and chief superintendents in Home Office police forces in England and Wales, as well as officers at those ranks within British Transport Police, Civil Nuclear Constabulary and Isle of Man Constabulary. Our vision is to support and represent our members’ welfare and interests, while being an influential voice in policing for the public good.
2. The Public Service Pensions and Judicial Offices Bill, as currently drafted, will have a detrimental impact on our members. The proposed changes will effect both those who did and those who did not suffer discrimination as a result of the transitional protections in the police CARE pension scheme of 2015 (the reformed scheme). These written submissions represent our own views and the views of members on the proposed changes.
TRANSFER TO CARE SCHEME ON 1 APRIL 2022
3. When the reformed pensions schemes were introduced in 2015, following Lord Hutton’s report on public service pensions in 2011, police officers aged 45 and over on 1 April 2012 and those who were aged 38 and over with at least 20 years of pensionable service, were promised they could remain in their legacy 1987 scheme. These were known as transitional protections and were designed to cushion the impact of the changes for those who were closest to retirement and had the least time to make alterations to their retirement plans.
4. Similar protections had been given to other sectors of public service, following negotiations with their trade unions, although Lord Hutton’s report had advised that such arrangements were likely to discriminate on grounds of age. (The government has a legal obligation to consult with trade unions, which does not extend to consulting with police staff associations.) On 20 December 2018 the Court of Appeal decided that the transitional protections were directly discriminatory on grounds of age. The provisions also indirectly discriminated against women and ethnic minorities.
5. About 30,000 officers benefitted from the transitional protections when the CARE scheme was introduced in 2015. Like members of other public service pension schemes, they were promised that they could remain in their legacy schemes until they retired. The PSA calculates that about 7000 of these officers remain with the police service and are likely to be transferred to the 2015 scheme on 1 April 2022, contrary to the promises they received. The reformed scheme is less beneficial than the legacy scheme and officers in the legacy schemes will suffer financially as a result of the transfer in April.
6. Although members of the 1987 scheme can retire aged 50 so long as they have 25 years of pensionable service, it is rare for them to do so. Most officers stay for a full 30 years of pensionable service before retiring. If they leave earlier, they erode the benefit of double accrual which applies after 20 years of pensionable service
7. Members who will transfer to the 2015 scheme with less than thirty years of pensionable service in the 1987 scheme include those who were aged 45 on 1 April 2012 and joined the service late, or have worked part time and taken career breaks in order to care for families. They have not yet accumulated the thirty years of pensionable service necessary to retire on full benefits under the 1987 scheme. A significant proportion of these officers are women and the transfer date indirectly discriminates against them. These officers feel betrayed.
8. Although the PSA, the National Police Chiefs Council and the Police Scheme Advisory Board all warned the Government of this discriminatory effect in their responses to the Government’s consultation on how to remedy the discrimination, there was no reference to it in the Government’s consultation response and associated Equality Impact Assessment. On 15 December 2021 the Administrative Court of the High Court made a finding of fact that the government had made decisions on issues covered by the consultation without first considering the consultation results. The court considered the consultation was unlawful.
9. There is a fleeting reference to indirect discrimination at paragraph 4.16 of the third Equality Impact Assessment of July this year, which post-dates the Government’s consultation response by several months. The concerns are dismissed on the grounds that extending the date of the transfer to the reformed scheme for a given cohort would give rise to further discrimination. This assessment is made without evaluating how many women are affected and to what extent, and without addressing how any discrimination might be rectified.
10. Unlike the 1987 police scheme, almost all public sector police schemes have a normal pension age. Most workers who benefitted from transitional protection will have reached their normal pension age and retired by 1 April 2022, which means the Government has been able to keep its promise to them. The government maintains that there is no magic behind the transfer date. It is simply the earliest possible date for transferring public sector workers from their legacy to their CARE schemes, and pension changes usually take affect from 1 April.
11. The PSA considers an exception should be made for members of the 1987 police scheme. If pushing back the transfer date to the police scheme is likely to be discriminatory, alternative solutions should be considered that are not discriminatory. If discrimination is inevitable, then compensation is a solution.
TREASURY DIRECTIONS PARTICULARLY IN RELATION TO COMPENSATION (CLAUSE 21), VOLUNTARY CONTRIBUTIONS (CLAUSE 22) AND THE CALCULATION OF THE COSTS CAP (CLAUSE 80)
Compensation (clause 21)
12. The PSA is concerned that it is left to Treasury Directions to identify those heads of compensation which may be recovered from scheme managers, all Chief Constables in the police sector. The Treasury is allowed a very broad discretion to decide the extent to which members may be put into the same position as they would have been in had the discrimination not occurred.
13. We welcome the amendment tabled by Lord Davies at the report stage which allows members caught by the "pensions trap" to recover compensation under clause 21. These are members who, after transfer to the CARE scheme, must stay beyond 30 years of pensionable service in order to accrue full benefits in the 2015 scheme. The longer they stay in service after thirty years of pensionable service the more their commutation entitlement reduces under the 1987 legacy scheme, resulting in a smaller lump sum on retirement.
14. As Lord Leckie intimated, this loss does not arise directly from rectifying the discriminatory effect of the transitional protections, but rather from the early date of transfer to the CARE scheme, and so may be outside the strict parameters of clause 21 which concerns compensation. The resolution of the pensions trap probably needs to be addressed elsewhere in the bill.
15. PSA members are also concerned by the additional cost of obtaining accountancy advice in order to reassess tax liability as a result of transfer to the legacy scheme over the remedy period, or a later decision to remain in the reformed scheme over this period. This cost would not have accrued were it not for the government’s mistake and members should be compensated for it.
16. Rather than leave it to HMT to determine heads of compensation without reference to parliament, the PSA suggests that a schedule of heads of compensation be added to the bill.
17. In addition, the bill should create an independent central panel to decide applications for compensation. Panel members for police officer claims might include a Chief Constable, a representative from a police staff association and a lawyer chairman to decide whether the claim for compensation is made out and results from the discriminatory effect of the transitional provisions. There should be a right of appeal. Such a process will ensure consistency in approach rather than leaving these decisions to individual scheme managers.
Voluntary contributions
18. The PSA welcomes Lord Leckie’s new clause 22 which allows payment of voluntary contributions during the remedial period . The PSA is concerned that the voluntary contributions may be made only if the scheme manager is satisfied that the member would have entered into similar arrangements but for the discrimination. In other words, if he had been in the legacy scheme throughout he would have made voluntary contributions. This allows the scheme managers of the various police schemes, who are all Chief Constables, to decide the issue and is likely to lead to inconsistencies in results. The PSA considers that this is an issue to be decided by an independent panel, as described in the preceding paragraph. The PSA is also concerned that the suggested clause is not accurately reflected in the recent consultation on amendments to the police scheme regulations.
Costs cap
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19. The PSA supports the submissions made by Lord Davies at report stage on the exclusion of the costs of the remedy from the cost control mechanism. This provision affects all of the PSA’s members. Even those who did not suffer discrimination and so do not benefit from the remedy will be contributing to the cost of the remedy, which arises through no fault of theirs but because of the government’s mistake. That cannot be right.
20. Most importantly, this is an excellent example of the breath of the powers that the bill delegates to HMT. The PSA agrees with Lord Davies that this is an issue of policy rather than the technical implementation of policy and the issue should be decided in primary legislation, rather than by HMT directions.
January 2022
Chief Superintendent Dan Murphy, BA(Hons), MSc.
National Secretary Police Superintendents' Association (PSA