Govt launches consultation on civil service pension scheme changes

The Cabinet Office has launched a consultation on a number of proposed changes for civil service pension scheme members, including future member contributions, as part of its McCloud remedy.

The consultation, which closes on 17 January 2022, addresses the changes being made to implement the ‘prospective remedy’ for McCloud, which will involve moving all remaining active members, including partial retirees in active service, to a reformed scheme, Alpha, from 1 April 2022.

The legacy scheme, the Principal Civil Service Pension Scheme, will then be closed to future accrual from 31 March 2022.

This is expected to ensure that from 1 April 2022, all active members of the alpha (defined benefit) civil service pension scheme will be accruing benefits in the same scheme.

The changes are part of the governments effort to address age discrimination issues, after a 2018 ruling found that changes to firefighters and judges' pension schemes had been discriminatory, with the government since confirming that the ruling would apply to all public sector pension schemes.

In light of this, the government announced plans to ensure "equal treatment" for all members in main public service pension schemes through the Public Service Pensions and Judicial Offices Bill, which is expected to receive Royal Assent in early 2022.

The consultation is also looking to address the continuation of member contributions for alpha, proposing to rollover the 2021/22 member contribution rates and consider whether any changes are needed following the final results of the 2016 valuation, which was paused in light of the McCloud ruling.

The government has also proposed that, due to the pay pause for Civil Servants earning above £24,250, as well as tax thresholds being frozen, member contribution rates and salary thresholds from 2021/22 also be rolled over for use in 2022/23.

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