Fire Brigades Union and BMA Slammed in High Court Over Pension Cost Cap Challenge
The High Court has dealt a blow to two major unions after dismissing their challenge to the Government’s handling of pension costs linked to the McCloud remedy.
Unions Take on Government Over Pension Cost Control
The Fire Brigades Union (FBU) and British Medical Association (BMA) launched a Judicial Review against HM Treasury. They challenged the decision to include the McCloud remedy costs within the public service pension cost cap mechanism.
However, their bid failed. Mr Justice Choudhury ruled that the Government’s move was not unlawful and threw out the unions’ claims on all counts. The door remains open for an appeal, but for now the Government stands firm.
What is the McCloud Remedy?
The McCloud remedy fixes unlawful discrimination found in public service pension reforms introduced in 2015. It provides transitional arrangements to make the schemes fairer and compliant with the law.
Cost Cap Mechanism Explained
- Public pension schemes operate under a cost cap rule to control expenditure.
- A cost target is set and measured regularly through actuarial valuations.
- If scheme costs stray too far from the target, benefits or member contributions are adjusted to bring costs back in line.
- The Government included the McCloud remedy costs when comparing actual costs against the target.
Why the Government Included McCloud Costs
The Government Actuary’s Department (GAD) calculated the McCloud remedy cost at a hefty £19 billion for UK public service pensions during 2016 valuations.
Experts warned that excluding these costs from the cap would make schemes appear to be under budget, triggering automatic increases to benefits or cuts to member contributions.
Including the McCloud costs in the cap mechanism keeps pension costs balanced and sustainable, said the Government and its advisors.
