Government Response to the Public service pension schemes

The Chief Secretary to the Treasury has published a written ministerial statement to announce the government's response to the public consultation (which closed in October 2020) on proposals to address the discrimination caused by transitional protection arrangements when the reformed pension schemes were introduced in April 2015.

Click here to go to the ministerial statement and consultation (This link opens in a new window).

The outcome only affects members who were in service on or before 31 March 2012 and have continuous service on or after 1 April 2015, including if they have a qualifying break in service of no more than five years.

Following consideration of the wide range of views expressed through the consultation, the government intends to implement the deferred choice underpin.

This means that those affected will receive a choice of which pension scheme benefits they’d prefer for the period between 2015 and 2022 (known as the remedy period). The choice will be between their legacy (final salary) or career average (reformed) scheme benefits. The choice will be made at the point in time when benefits are put into payment, which for the majority will be at retirement. Until they make their choice, they’ll be in the final salary (legacy) scheme for the relevant period.

The government states that by deferring the choice a member will have more certainty over their benefit entitlements when making their decision. This means they’ll be able to choose the scheme benefits that are most likely to be best for them.

The response also confirms that the final salary (legacy) scheme will end on 31 March 2022. Any pension they have built up in the final salary (legacy) scheme up to that date, and the Normal Pension Age at which their benefits can be taken in full, are protected.

What do the proposals mean to members who are affected?

  • If they’re eligible, they’ll choose between their final salary (legacy) and career average (reformed) pension scheme benefits for service between 1 April 2015 and 31 March 2022. They’ll make their choice at the time they take their pension benefits (e.g. when they retire), this is named the Deferred Choice Underpin (DCU).
  • Initially, members who were moved to the career average (reformed) scheme in 2015 (or later if they had tapered protection), will be moved back into the final salary (legacy) scheme for the remedy period. However, when they then take their pension benefits, for example at retirement, they’ll get to choose between their final salary (legacy) and career average (reformed) scheme benefits. At this point, they’ll receive the necessary information to be able to make a choice about which pension scheme benefits are better for them.

  • Affected members who have already taken benefits from the final salary (legacy) scheme, or will before April 2022, will be given a choice between their final salary (legacy) and career average (reformed) scheme benefits for service between 2015 and the date they take their pension benefits. This choice will be offered as soon as possible after legislation is implemented and any change to benefits will be backdated.

  • From 1 April 2022 all active members will accrue service in the career average (reformed) scheme.

What happens next?

Once we have had an opportunity to analyse the consultation response further with the Department for Education and our stakeholders on the next steps, we will provide further information as soon as possible.

What does a member have to do?

They don’t need to do anything now; we ask that they wait for us to contact them as we’re identifying those who are affected. They should keep up to date by checking the information on the website. We’re currently working on the timescales for when we’ll be contacting members.

We suggest that they read the response or the factsheet we have created to help them understand what the changes will mean. We’d also suggest they look at our FAQs for further information.

Click here to download the Transitional Protection factsheet.

What do you as an employer need to do?

Again, you don’t need to do anything now except signpost members to the information we’ve suggested and advise them that they should wait to be contacted directly from us.

We do anticipate there will be some queries on an individual basis but will understand more on this as we work though the consultation response with the Department for Education. It’s therefore important to ensure that member records are kept up to date and you retain service and salary information in case we do have queries in the future.

Keeping in touch

We’ll be providing you with more information on these changes in the coming months so please keep up to date via our website, newsletters and social media channels.

Last Updated: 04/02/2021 13:27