Unions’ Legal Challenge Over Pension Cost Cap Slapped Down
The Fire Brigades Union (FBU) and the British Medical Association (BMA) have suffered a legal blow after their challenge over the public service pension cost control mechanism was dismissed by the High Court.
McCloud Remedy Upheld in Cost Cap Calculation
The unions sought a Judicial Review against HM Treasury’s move to include the hefty McCloud remedy costs in the pension schemes’ cost cap mechanism. The McCloud remedy fixes the unlawful discrimination found in the public service pension transitional arrangements introduced in 2015.
But the government’s decision stood firm. Mr Justice Choudhury ruled the move was lawful and dismissed all grounds of the challenge. The unions may still try to appeal the verdict.
What’s the Cost Cap Mechanism?
- Public service pension costs are monitored during actuarial valuations.
- If costs stray too far from a set target, member contributions or benefits get adjusted to bring them back in line.
- The government insisted that McCloud remedy costs must be factored into these valuations.
Bill for McCloud Remedy Hits £19 Billion
The Government Actuary’s Department (GAD) valued the McCloud remedy at a staggering £19 billion across UK public service pension schemes during 2016 valuations.
Experts warned that if this cost was excluded from the cost cap, schemes would appear under budget, forcing hikes in benefits or cuts in member contributions to stay balanced. Including the remedy in the cost cap stops this imbalance.
This latest ruling keeps the pension cost framework intact — but watch this space if the unions push on with appeals.
