Government must not delay pension claims any longer

30 November 2021

Polfed News

PFEW’s National Secretary has warned Government that the unexpected publication of new guidelines regarding unfair discrimination caused by the 2015 pensions reforms must not further delay the settlement of retirees and members’ pension claims.

Alex Duncan reacted to a decision yesterday [29/11] by Her Majesty’s Treasury (HMT) to issue new guidelines advising public sector pension Remedy claimants and schemes to halt claims until new legislation was created to reduce the potential for tax consequences.

Previous Government advice made it clear PFEW members who moved to reformed pension schemes on or after 1 April 2015 and retired, had an entitlement to be treated as a member of their legacy scheme for the remedy period, if they wished.

However, the new HMT and HMRC advice on drafting the Remedy through the McCloud Bill has now described the uncertainties caused by the Government’s original guidelines as ‘considerably greater than was previously thought.’

HMRC advised yesterday that schemes should not process immediate cases before new legislation was in place, due to a significant risk of generating unintended tax consequences which may subsequently need to be reversed. HMRC added: “It is not possible to give any guarantees that the Remedy and its tax consequences will work as intended for everyone, before the legislation is in place.”

Following the unexpected announcement, Mr Duncan said: “HMT issued guidance earlier this year to Chief Constables advising them on the steps to take for pension scheme members who were part of the effected group and looking to retire.

“The general purpose of the guidance was to give those individuals the ability to have the Remedy period classed as having been during their original pension scheme, and so they might retire with those benefits.

“It now appears while working on the details of how the Remedy would be implemented, the Treasury identified unintended difficulties caused through the use of the original guidance, in particular relation to existing Tax legislation. They have now, therefore, withdrawn the guidance.

“PFEW continues to be of the view those who have suffered unlawful discrimination should have this rectified and should not suffer any further detriment due to any time lag whilst the Remedy is designed and implemented. 

“The implementation of the immediate detriment guidance may cause challenges for Government, but it is unacceptable the solution is for those who have suffered discrimination to be further disadvantaged before the situation is remedied.

“We will, therefore, continue in the process of identifying suitable cases to progress to legal challenge on this issue, work which had already started prior to this announcement.”

Leigh Day Solicitors - Pension Challenge Claimants Update

Members of the pension challenge group represented by Leigh Day Solicitors have been notified a settlement offer has been made in respect of compensation. As a result, members who lodged claims with PFEW have asked how this impacts on their claim.

PFEW claims are separate and the settlement discussions with Leigh Day on behalf of their own clients do not relate to those lodged by the UK and international law firm Penningtons Manches Cooper (who were instructed by PFEW). PFEW’s claims are not as far along the legal route, and any compensation which may be awarded regarding those claims will be considered by a Court at a later date.

Please also note, the window to join the PFEW Claim with Penningtons has closed.

SUMMARY OF NEW HMT GUIDELINES (29/11/21)

• Her Majesty’s Treasury (HMT) have issued a note which assesses the advisability of processing immediate detriment cases before new legislation to enact the McCloud remedy is in place, and the implications of this assessment for the Home Office guidance on processing immediate detriment cases published in August 2020 and revised in June 2021
• Previously, the Government made clear it accepted members who moved to reformed pension schemes on or after 1 April 2015, and had subsequently retired, had an entitlement to be treated as a member of their legacy scheme for the remedy period, if they wished. It was acknowledged that there were still policy and administrative issues to work through, and the consultation document noted the complexity involved and systems changes may be required
• In August 2020, the Home Office described this as the ‘best attempt possible’ to set out a pathway for processing pipeline cases ahead of legislation
• Following further work done by HMT and HMRC on drafting the remedy in the McCloud Bill, the position changed, and it has been disclosed that: ‘uncertainties are considerably greater than was previously thought. In some situations, it now appears [it] may not give all the powers required to operate the remedy smoothly and predictably, without generating significant uncertainty for schemes, and risking significant second or third adjustments for individuals’
• Due to this, HMT decided immediate detriment cases, including those yet to retire, could not be processed before legislation is in place ‘without considerable risk, uncertainty and administrative burdens for individuals, schemes and employers’
• To do so, they claimed individuals could end up owing tax on contributions made in the past to their reformed scheme, and ‘even significant second, and sometimes third, corrections once legislation was in place and issues were corrected’
• HMT have claimed further Government legislation would ‘address uncertainties to deliver proportionate and reasonable results which are robust to further challenge on the grounds of discrimination’
• HMT and the Home Office have now advised that schemes DO NOT process pipeline immediate detriment cases before legislation is in place, given uncertainty about the significant risk of generating unintended tax consequences that may need to be reversed
• They advised: “It is not possible to give any guarantees that the remedy and its tax consequences will work as intended for everyone, before the legislation is in place.”