A challenge to the closure of legacy public sector pension schemes dismissed

The High Court has dismissed a challenge to the closure of legacy public sector pension schemes. This was on the basis that, although there had not been proper consultation and there had been a breach of the public sector equality duty, the Government would have reached the same conclusions even if there hadn’t been a breach. A secondary reason was that allowing the challenge would have inappropriately interfered with the Parliament’s right and ability to make laws.

This was a challenge to a decision to close legacy public service pension schemes, which included police schemes, and to move all active members to reformed pension schemes. The legacy scheme itself was based on final salary schemes and the reformed schemes were based on career average earnings.

The Police Superintendents’ Association (PSA) was concerned about the impact the closure decision would have on officers in the Police Pension Scheme 1987 and the new Police Pension Scheme 2006. Those two schemes were to be closed from 1 April 2022, with active members being transferred to the reformed police scheme established by the Police Pension Regulations 2015. Under transitional arrangements contained in Schedule 4 of the 2015 Regulations, certain members of the 1987 Scheme and the 2006 Scheme were able to remain in those schemes for what was then an unlimited period. The PSA relied on representations made to members with this protection around the time the 2015 Regulations were made that they could remain in their police legacy schemes until they retired. The HM Treasury accepted that those representations were made.

Therefore, the PSA challenged on the following grounds:

1. Breach of the duty to consult
2. Breach of the public sector equality duty contained in s.149 Equality Act 2010
3. Breach of legitimate expectation that police could remain in their legacy scheme until required
4. Error of fact

The HM Treasury took issue with each of the grounds and suggested that in any event, the court should refuse to grant relief by reason of s.31(2A) Senior Courts Act 1981 which states it requires judges to refuse relief in judicial review of administrative decisions if it is ‘highly likely’ that the conduct complained of did not make a significant difference to the outcome of the decision. In addition, they suggested it was an infringement of parliamentary privilege.

The Decision
The judge dismissed the claim. The judge rejected the legitimate expectation and error of fact grounds. The judge held that the representations were incapable of forming a legitimate expectation after McCloud, as enforcing the representation for some groups would involve continuing unjustifiable discrimination.

However, in relation to the grounds for the breach of duty to consult and breach of the public sector equality duty, the Chief Secretary to the Treasury, took the decision to close the legacy public service pension schemes before he had received a summary of the consultation responses or even a draft of the relevant equalities impact assessment. These challenges were therefore made. The PSA asked the judge to make an order quashing the consultation and consultation response or alternatively declarations that the consultation was unlawful and that the closure of the legacy scheme was unlawful.

However, the judge held that it would not be appropriate to make these orders on the basis that it was highly likely that the decision to close would still have been made if the Chief Secretary had considered the consultation responses and equalities impact assessment before making the relevant decision.

In relation to parliamentary privilege, the judge accepted that:

1. Quashing the consultation would have disrupted the passage of the draft legislation closing the legacy scheme through the Parliament which would have been an inappropriate interference with the Parliament’s powers; and
2. Similarly, a declaration that the consultation was unlawful or that the policy decision was unlawful would have had the effect of inappropriately influencing the course of the draft legislation when this was properly a matter for the Parliament.

Comment
In this case there were good reasons for wanting to close the legacy public sector schemes, as this was considered the most proportionate way to remove discrimination between older and younger members. The key takeaway from this case is that the courts will be very cautious about interfering with the way in which Parliament makes statutes, particularly where the challenge to a draft statute is essentially a challenge to a political decision.

For more information

If you would like to find out more about public sector pension schemes, please contact Ravinderjit Dosanjh and Doug Mullen.

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