Pension Cost Cap update

29 April 2020

Some of you may be aware of information circulating on social media this week which states members of the CARE15 scheme are currently not receiving benefits which entitles them to a pension top-up of around 2% of their monthly salary whilst claiming the Federation is doing little to challenge this.

I feel it is important to explain the series of actions taken over the previous years as well as update members on where we are at presently and what action we are taking as the Government’s pause on this cost cap mechanism continues more than a year later.

In April 2016 a police pension schemes’ valuation indicated that the cost cap mechanism had been breached. The Scheme Advisory Board (SAB), of which the Police Federation of England and Wales (PFEW) is a member, was then tasked with formulating a proposal for the Home Secretary to address this breach.

After due consideration and calculations, the SAB wrote to the Home Secretary indicating its preferred solution was for an increase to the accrual rate in the 2015 CARE Scheme from 1 April 2019.

Whilst this process was ongoing, the judges’ and firefighters’ cases were progressing through the courts. Ultimately the transitional protections were ruled as discriminatory, and the Government decided the remedy to the illegal age discrimination would be applied to all of the public service schemes, including the police schemes (under which the Pensions Challenge Group had brought their case).

As a result of the outcome of these cases, the Government announced it would pause the application of the cost cap mechanism and removed the requirement for a cost cap calculation from the valuation as it would not be possible to accurately value the scheme’s liabilities until the remedy to the discrimination is determined.

The Government was at pains to describe this action as a pause in rolling out the benefit improvements, however, we are now in excess of a year past that point and there is still no sign of it being lifted.

We have repeatedly prompted the Government to indicate when it intends to resume the process, and as part of this the PFEW is, in fact, joined as Interested Parties to the Fire Brigade Union’s application for a Judicial Review of the pause in the application of the cost cap mechanism.

The Federation, along with the other UK staff associations, has also refused to condone the Government’s extension of the current member contribution levels in the police schemes. In our formal response to the consultation our primary reason for objecting was the continued unjust treatment of members in the 2015 CARE Scheme, who we believe are due an increased accrual rate from April 2019.

We are acutely aware that the continuation of the pause in the cost cap mechanism is perpetuating an unjust situation for the younger members of the 2015 CARE Scheme from April 2019, and we will continue to fight for them to receive retrospectively applicable just treatment.

We remain committed to representing our entire membership, including members who have recently joined as well as those who have dedicated their career to policing for many years.