Following legal cases brought against the Government, they have conceded that the protection offered to older members when introducing new public sector pension schemes resulted in unlawful age discrimination.
The BMA brought legal cases on behalf of its members which are currently on hold. However, similar protection to older members was offered when the NHS 2015 career average revalued earnings scheme was introduced and as such this is also likely to amount to unlawful age discrimination.
It is important to note however that it was the offering of protection to older members rather than the introduction of the new scheme that is unlawful.
In order to remedy this age discrimination, the Government has released a consultation proposing two options for the period in which the discrimination occurred (1 April 2015 to 31 March 2022).
The consultation outlines that the likely solution to rectify this discrimination is to offer affected members the choice of whether they are transitioned to the 2015 scheme or remain in their legacy scheme (1995/2008) for the remedy period. After the remedy period, all scheme members are likely to move to the 2015 scheme, probably in April 2022.
One of the key aspects the consultation is looking at is the point at which members choose which scheme they wish to be during the remedy period. The first option is for an immediate choice as to whether eligible members wish to be considered in the new scheme or in the old 'legacy' scheme for the remedy period. This choice would be made some time after 1 April 2022.
The second option is for a deferred choice underpin which would place all affected members back in their old ‘legacy’ scheme for the remedy period, leaving the choice to be made at a later date such as the point of retirement. The benefit of this latter option is that members will know which scheme provides the better financial outcome for the remedy period as they will be at the end of their NHS careers and will be provided with comparative estimates.
Either option will address any annual allowance tax issues that arise as a result of moving schemes. Any changes which result in a tax charge owed by the member will be bound by the four year statutory time limit but any monies owing to individuals will still be paid without reference to the four year statutory limit and therefore in full. However there are different implications as to when and how this will take place depending on which option is used as the remedy.
Individuals who have opted out of the scheme and are not active members will need to make a case for their inclusion in the remedy directly with NHSBSA. However this is an area the BMA are exploring separately as part of our own legal case as we believe that members should not suffer any detriment as a result of the unlawful age discrimination.
Once the remedy is decided (immediate choice or deferred underpin choice) further to the conclusion of the consultation the decision members will need to make will very much depend on individual circumstances and professional independent financial and taxation advice may be required.
The BMA will be making a considered response to the consultation in due course. The deadline for the consultation is 11 October 2020.