NIPSA is the largest Northern Ireland based trade union with over 40,000 members across civil and public services. We are the main recognised trade union within the NICS with the majority of PCSPS(NI) members also being NIPSA members.
In line with our response to the consultation on the Prospective remedy for McCloud, NIPSA raised concerns that the decision by Government to withhold benefits from our members following the 2016 GAD Valuation was a disgraceful decision and that a remedy for this was not included in that consultation. Since then, these benefits have been denied to scheme members by instigating a process that would benefit the Government and employers rather than our members.
NIPSA remains concerned that given its track record, Government will now force pension schemes, which are ultimately NICS Departments and scheme members to pay for their discrimination. We demand that all additional costs and staff required to develop, implement and maintain the McCloud judgments, are provided additionally by Westminster as neither scheme members, nor NICS Departments should pay for Government discrimination.
NIPSA also acknowledges the recent Government announcement that McCloud should not adversely impact on future GAD valuations of public sector pension schemes but we demand that Civil Service Pensions Branch engages GAD to carry out analysis of the likely impact of McCloud on future NICS valuations.
I will set out the NIPSA response to the questions below but would seek to make a few general comments first.
NIPSA believes that the proposals as outlined provide an adequate procedural redress to the discrimination that was perpetrated by the Government in this case. However, the proposals are not without concerns and we believe that Government could and should have done more to recognise and compensate for the discrimination and protect those impacted. NIPSA appreciates the ongoing engagement by Civil Service Pensions staff on the McCloud remedies and especially the work taken on the Scheme Provision Definition Documents that have been especially helpful in understanding the impact of McCloud.
And while recognising the complexity of the remedy, we also believe that Civil Service Pensions Branch needs to be adequately resourced in order to meet the legislative challenges set out in the consultation.
We understand that the Department of Finance, through the budget allocation by the Secretary of State, has received a punishing budget that will impact on the services it provides. We also understand that recruitment into vacant pension posts has been laboured at best. We demand that Civil Service Pensions Branch is properly resourced to meet the challenges of McCloud and that it should suffer no detriment to its resources given this work and its importance.
We are concerned that any diminution of the resources required may lead to maladministration of the process. We believe it is crucial that there is continuing engagement via the NICS Pensions Board and DoF/Local Trade Union Sides to monitor the capacity to deliver the remedy and ensure that remediation of cases can be done without causing further upset, detriment and confusion to those already suffering detriment from the original discrimination.
Finally, communication is key and we welcome the work to date in this matter and ask that DoF continues to use all media and communication options available to it to ensure that all scheme members – active, deferred or current – are aware of the outcomes of this consultation and its ongoing impact on them.
I would note the case for those members that have Preserved Rights and those previously in the Tapered Group. We appreciate that implementing McCloud will be complex for everyone but we believe that these two groups of scheme members should be written to separately to explain generally that they will be treated differently than other scheme members and why. We believe doing so will reduce the number of queries that will likely generate.
Questions
Question 1: Rollback
NIPSA welcomes the decision to move all DCU and IC cases to legacy as a means of easier administration and also meaning that where a scheme member chooses legacy for the period from April 2015 to March 2022, there will be no change needed. This will also be the default position if a scheme member fails to reply and so will again, help with administration.
Question 2: Immediate Choice decision
NIPSA remains concerned that the volume of work required to action IC will still mean significant delays for scheme members and that the final date of 31 March 2025 may be too close to ensure all IC cases, and future applications for benefits can be administered. We agree that priorities need to be decided upon and that ill-health retirements should be a priority. We believe a timeline should be produced and shared with scheme members setting out indicative dates showing when the various groups of IC members will be administered.
Question 3: Deferred Choice Underpin
We welcome the DCU and had argued for this previously. We remain concerned that scheme members who have not accessed their benefits – active or deferred – do not have sufficient information in the RSS to keep them informed about their entitlements. We will cover this below but RSSs must be sufficiently detailed and easily understood so as to ensure that active and deferred members are informed about the remedy period and its impact on them.
Question 4: Opted Out Service Elections
We welcome the option for members to opt in where they had previously opted out as a result of the 2015 changes. We understand that contributions must be paid to cover this period but remain concerned that some members may find this unaffordable due to the amount of money needed to cover up to a 7-year period. Repayment of contributions needed must be as flexible as possible and members must be given all opportunities to pay additional contributions. As they have suffered discrimination and been adversely impacted, they should not now miss out because a repayment plan was unaffordable for them.
Question 5: Remediable Service Statements
The provision of clear and comprehensible information contained in the Remediable Service Statements, on which members can then make decisions without further need for clarification, is of particular importance. We appreciate that this is a complex process and will impact on members in different ways. However, the RSS, whether for IC or DCU, must provide all the necessary information but be easily enough understood that scheme members can understand their own circumstances and options and make informed decisions on those options. Jargon must be avoided at all costs and we would suggest that once RSSs have been drafted, they are tested on groups outside of Pensions to ensure they can be understood before being issued to scheme members. We believe that members should have the option for online or postal RSSs also.
Question 6: Election Timing
NIPSA welcomes the 12-month window for decisions once the RSS is issued and also agrees that all efforts should be made to encourage scheme members to take the necessary time but try and get responses back within 3 months. We believe that communications to IC members 2-weeks before RSSs issue could also help prepare the way and encourage members to decide on their Choice within the 3-month preferred timeframe. We also believe that regular reminders will be needed and that CSP should make efforts to chase up those IC members that do not reply within the first 4 months.
We do remain concerned about the 3-month limit for DCU members when making applications for their benefits. While this has extended from the current two months, three months will challenge members when they need figures, will be seeking advice, engaging family, speaking with their employer etc. before making their decision. We accept the need for as up-to-date information as possible to inform decision-making but believe this period should be extended to 4 months.
Question 7: Eligible Decision-Maker
NIPSA welcomes the options available and believe the proposals strike the right balance between the scheme member, their representative and the need for the scheme manager to make decisions where a choice has not been made. However, we would expect that the decision by the scheme manager would only be after extensive efforts to engage the decision-maker had been taken.
Question 8: Other Special Cases
We cannot add to the Special Cases already listed and so note this position.
Question 9: Divorce & Dissolution Arrangements
NIPSA agrees with the proposals set out especially that a child should not be detrimented by the decisions of a parent who does have caring responsibilities. However, given the sensitives and bad blood that sometimes has been associated with divorce, we believe that any RSS or correspondence setting out the possible impact of the remedy decision must be clear and sufficiently sympathetic to everyone’s circumstances.
Question 10: MVCs
NIPSA welcomes the proposals that will allow for Member Voluntary Contributions to be adjusted on the basis as if the discrimination had not happened.
Question 11: Transfers
We believe that the proposals achieve the intent to preserve transfer rights for scheme members. We would ask for clarification on numbers and identification of areas where bulk transfers took place between April 2015 and March 2022 for scheme members to understand if they are impacted or not (likely not, I accept) – and to also allow NIPSA to engage its members in the affected areas.
Question 12: Ill-Health Retirements
NIPSA welcomes the proposals for ill-health retirements but would raise two issues. The first is the capacity of Occupational Health Service to deal with the approximately 3000 additional medical assessments. Additional resources need to be allocated to OHS and this must be provided from Westminster. Secondly, one of the reasons that many of the applications for ill-health retirement are rejected is that doctors cannot reasonably foresee future medical improvements or assess possible deterioration in health up to retirement age. This is especially the case for younger scheme members. NIPSA considers that the decision to re-assess IHR based upon the medical information available at the time, in some cases medical reports from eight years ago, as flawed. While we do not believe that scheme members should be able to enter a new retrospective application for IHR, those falling within this process should be allowed to provide new, additional medical evidence, if they consider that appropriate that would be considered in tandem with their previous medical reports as this would allow OHS to provide a more informed decision.
Question 13: Interest
NIPSA rejects the use of a daily compound interest rate to calculate monies owed to the scheme. Government was found guilty of discrimination and therefore any overpayments raised should be written off but if they were to be recovered, then the factual amount only should be used. Interest of any kind should not be used.
However, where an underpayment is identified, given the Government was found guilty of discrimination, a simple interest rate should be used to calculate the monies owed to scheme members by the scheme.
What should not happen is that a compound interest rate is used that will benefit the scheme but disadvantage scheme members while using a simple interest rate to again disadvantage scheme members while benefiting the scheme. If an interest rate is to be used for overpayments, and we believe it should not be used, then it must be the same rate for both and we believe that must be a simple interest rate.
Question 14: General: Policies We note given comments already provided for elsewhere.
Question 15: General: Regulations
We believe that the draft regulations are sufficient to facilitate implementation of the remedy but remain concerned that timescales are unlikely to be met given the volumes of work, the need to educate scheme members, deals with queries while continuing to provide a service to those seeking their benefits over the next two years. The matter of appropriate resources for Civil Service Pensions in the current economic climate remains a matter of concern.
Question 16: Equality
We note and agree with the findings of the Equality Screening and Rural Needs Assessment but would raise some concerns.
NIPSA is concerned that members will not be provided with the clarity and information they require to make an informed decision and this will especially impact on pensioner immediate choice members who will not have access to either work colleagues or trade unions for support in this decision. While independent financial advice is available, this comes at considerable cost and we believe this group in particular will be disadvantaged. We believe that Government must fund free independent financial advice for this group to ensure that they are properly supported in making decisions that have arose due to Government discrimination.
We also believe that younger ill-health retirees may suffer unequal treatment given the decision not to use up-to-date medical information when considering ill-health retirements will place them at a considerable disadvantage when set against older applicants.
Question 17: Additional Comments
- Liabilities – Given the implementation of this remedy is to remove discrimination found against the Government, every effort must be made to ensure that scheme members are not liable for any penalty resulting from its application. While we appreciate that there is a responsibility to manage public money, this should not override the fact that a scheme member should not be detrimented by the implementation of a solution to the Government being found guilty of discrimination. Scheme managers must not make decisions to raise an overpayment against scheme members under the Managing Public Money clause as a result of implementing this solution.
- Tax – While the current assumption is that the McCloud Remedy will likely have little impact on tax, NIPSA remains concerned that, as set out at Para 16.1 of the consultation – Some elements of taxation policy remain under development and guidance will be provided by HMRC. Simply put, this means that the consultation is not complete and a significant matter of interest, Tax, remains unresolved. NIPSA welcomes the commitment by Civil Service Pensions that once available, NIPSA will be engaged on the Scheme Provision Definition Document on Taxation but we believe that some process must be provided that will allow scheme members to be engaged on Taxation policy as required by this Retrospective Remedy.
- Compensation – NIPSA believes that while these remedies are to remove the discrimination put in place by Government, scheme members have not been compensated for the discrimination and injury to feeling they have suffered by the act of discrimination itself. These proposals provide no resolution to this matter. NIPSA is progressing this matter separately for its members.
The compensation proposed deals solely with circumstances where implementation of the remedy continues to place a scheme member at a disadvantage and no further information is available as to whether this will be a proper compensatory payment or just a refund of any difference. We believe further information should be provided on when and how compensation will be considered.
Summary
NIPSA welcomes the proposals as a means to rectify the discrimination found in the Hutton plans and these proposals do achieve this broadly. We remain concerned about Government abdicating its responsibility by not funding the McCloud Remedy costs and that this will adversely impact future valuations. And we remain concerned that Civil Service Pensions Branch will not have necessary resources to complete all this work within the timelines provided. NIPSA is committed to continuing to work with Civil Services Pensions Branch on this matter going forward.
Dooley Harte
Assistant Secretary
(On behalf of NIPSA)
