A question of legacy

by Vishal Sharma

Submit your response to the Government’s pensions proposal

Location: UK
Published: Friday 9 October 2020
vish sharma

We’ve written to you previously describing that, earlier this year, the Government conceded that the transitional protection offered to older members in the imposed 2015 NHS pension scheme was unlawful.

This protection allowed those members who were within 10 years of their normal pension age at 1 April 2012 to remain in their legacy (1995/2008) scheme and those between 10 and 13.5 years from their normal pension age, tapered protection. Those more than 13.5 years from retirement were afforded no protection under the 2015 scheme. Subsequent legal claims, including one from the BMA on behalf of its members, have confirmed that this protection was unlawful on the grounds of age discrimination.

The BMA delayed starting a legal case on this issue sooner as we were aware that it was the offer of protection rather than the introduction of the 2015 scheme itself that was unlawful. The likely response to such a ruling at an earlier stage would be to simply remove this protection, which is indeed what the Government is proposing. However, as a consequence of delaying this legal action, the earliest the protection can be removed is now 1 April 2022. This means that by this point all protected members will have reached their normal legacy pension age and cannot lose their protection.

The Government has launched a consultation on its proposals to remedy the discrimination to affected members. We believe that all members who transferred to the 2015 scheme from the 1995 or 2008 schemes have suffered a detriment. However, in their consultation, the Government has outlined that they consider that only those members of the legacy schemes who commenced pensionable employment before the 1 April 2012 have been affected by unlawful discrimination.  You can find more detailed information about the consultation here. In essence, the Government’s proposal is it will offer affected members the choice of whether they want to remain in the legacy scheme – 1995 or 2008 schemes – or the reformed 2015 scheme for the remedy period. This remedy period itself is between the 1 April 2015 and the 1 April 2022.

The question for scheme members is at what point should this choice be made? There are two proposed options, the first is making the choice as soon as possible post 2022 (immediate choice) or making the choice at the time of retirement (described as ‘deferred choice underpin’). The BMA firmly believes that deferred choice underpin is the only viable solution. Under immediate choice, this vital decision will be made based on assumed rather than actual values. This could be a major problem for some BMA members, as changes in personal circumstances that may be many years in the future could fundamentally alter these assumed values. Such changes might include things like a change in planned retirement date, different career progression or even a change in state pension age. These changes can mean that under immediate choice, the choice a member made was wrong, resulting in them receiving a lower pension. Under deferred choice underpin, by basing this on actual rather than assumed values at the time of retirement, members can be more confident when making this decision.

The timing of choice is the most pressing question in the consultation but there a number of other important considerations for consultants. The BMA has submitted a detailed response to the consultation and we have discussed our response in the presentation on the website. We strongly encourage you to submit an individual response to the consultation and we have produced an online tool to help you respond. So far 2,840 members have responded but please make sure your voice is heard and submit your own response – it only takes a few minutes. The consultation closes at midnight on the 11 October 2020 so please do this as soon as you can.

Vishal Sharma is BMA pensions committee chair