General
1. Why are the NI Judicial Pension Scheme and the Local Government Pension Scheme (NI) consulting separately?
These schemes will have separate consultations due to particular features of how they introduced the previous reforms.
The Department of Finance is working closely with the departments of both these schemes to ensure proposals line up, but the scheme differences mean separate consultations are the most appropriate way forward to allow for those schemes to consult fully.
2. What are the next steps after the consultation?
Following the consultation, the Department of Finance will publish its response, including options for legislative changes to the Public Service Pensions Act (Northern Ireland) 2014 to implement the solution. Individual schemes will draft and consult on scheme regulations to enact these changes in scheme rules.
3. How have the technical discussions fed into this consultation?
The technical discussions allowed the Department of Finance to hear and understand different stakeholders’ views at an early stage. The proposals were still in an early stage of development at that point and the discussions provided helpful information to further develop the proposals which are now included in the consultation.
4. What is the main purpose of this consultation?
The consultation is the next step in the process of addressing the discrimination. The two proposals will allow members a choice of which set of scheme benefits they wish to have for the remedy period. The Department of Finance would like to gather views on how these proposals will impact members and the responses it receives will feed into the final policy decision.
5. Who is in scope of the consultation proposals?
Scheme members who were in post on or before the 31 March 2012 and still in post on the 1 April 2015 will be in scope of these proposals.
This includes those members who are currently active, deferred or retired.
6. Will those protected by transitional protection also receive a choice between the new and old schemes?
Members who were originally protected by the transitional protection will also be provided with a choice of which scheme they would prefer to be a member of during the remedy period.
7. What is meant by the ‘remedy period’?
The remedy period is the time period for which members will be able to retrospectively choose which scheme they are to be a member of. It will run from 1 April 2015 which is when the reforms were introduced, until 31 March 2022 which is the point when treatment will have been equalised going forward.
8. Do members need to submit a legal claim to be eligible for these changes?
No. Members do not need to submit a legal claim for these pension changes to apply.
Both claimants and non-claimants who are eligible members of the relevant public service pension schemes will receive a choice of which set of scheme benefits they would rather have back to 2015.
9. Will non-claimants receive injury to feelings compensation alongside these retrospective pension changes as claimants will?
All eligible scheme members will be entitled to a choice. Injury to feelings compensation is based on individual circumstances and decided by the Courts. We are unable to comment further on ongoing litigation.
10. What is the cost of these changes on public finances?
The estimated annual cost to the Northern Ireland public service schemes is £100 million for each year of the remedy period. This currently equates to approximately £700 million for the remedy period.
11. Who is going to pay for all of this? Will it result in cuts to frontline services?
These proposals will increase the value of schemes to members. The cost control mechanism was designed to include such costs, and so this will need to be considered in the completion of the cost control process for the 2016 valuations.
The final policy design has not been decided yet, as the consultation is seeking views on two proposals, and therefore the total administration costs are not fully known.
12. How has COVID-19 affected the project?
COVID-19 has caused only minor delays in the project timeline.
Retrospective policy
13. When will the retrospective policy be implemented?
Removing the discrimination will take time. It is important that all eligible members are treated equally and are able to choose to receive benefits under the terms of either their legacy scheme or the reformed scheme. For most, this will not happen before 2022 but any payments will be backdated to 2015 where necessary.
14. When will those who are suffering immediate detriment see their benefits amended?
The aim is to resolve the position for those who retire before the proposed changes are made in 2022.
Where possible members who retire before 2022 will be offered the choice of which scheme they want to retire under.
15. Which proposed option is preferred?
The Department of Finance is consulting openly on both policy options: immediate choice and deferred choice underpin.
Both options have their advantages and disadvantages.
No decisions have yet been taken as to which option is preferable. That decision will not be made until after the consultation process is complete.
16. Why are members who joined between 2012 and 2015 not in scope?
The Courts identified unlawful discrimination as a result of differing treatment between older and younger members in service on or before 31 March 2012.
It is therefore treatment between these groups that we are now equalising.
17. Why are scheme members being asked to make the choice between the different sets of pension benefits?
The differences between the old and new pension schemes mean the set of benefits that is best for individuals depends on personal circumstances.
We cannot simply extend transitional protection to all members and place them into the old schemes, because some members are better off in the new schemes.
Members should make this choice and will be provided with information to allow them to make an informed choice based on whichever option is chosen as the final policy.
Tax
18. Will these changes result in members receiving a tax bill that is larger than usual?
The majority of members will see no change to their tax liabilities.
A minority of members may see changes, which could be reimbursement or tax charges,
In some cases individuals may pay higher Annual Allowance charges, but typically only where their projected pension at retirement has increased.
19. Are the tax proposals allowing a tax break for some of highest paid public services employees?
No. The tax system will work in the usual way.
Where the pension changes produce disproportionate tax results, government will compensate individuals.
20. Why are people being made to pay tax for benefits they may never receive?
The tax system will work as usual for individuals benefiting from the proposed changes; the vast majority of individuals will see no change in their tax position.
21. Should affected scheme members retain their tax paperwork for 2015/16?
Yes. Depending on the eventual policy, the member may need the relevant paperwork to help them access appropriate compensation.
Therefore, it would be helpful if people kept their paperwork related to tax from April 2015 onwards.
This would include all self-assessment returns, P60s, the annual statements from your pension scheme administrator and documents relating to any other personal or occupational pension schemes.
Prospective policy
22. Why are you continuing with the unlawful reformed schemes? Why can’t we stay in the old schemes until retirement?
The 2015 reformed schemes were not unlawful. The way ‘transitional protection’ was implemented was found to be discriminatory. This is being removed by offering all affected members a choice of which scheme benefits they would like to have for the ‘remedy period’.
Many members have always been in the 2015 schemes. These schemes are progressive and fair. From 1 April 2022, all members will be in these schemes.
By 1 April 2022 all members who were originally offered ‘transitional protection’ will have reached their Normal Pension Age. If they choose to continue to work after this, they can do so as a member of a reformed scheme, along with all other members, irrespective of the choice of scheme they make for the ‘remedy period’.
23. Will members who were previously covered by ‘transitional protection’ also be moved into the new schemes?
From 1 April 2022, all those who continue in service will do so as members of their respective reformed scheme.
24. What about the 25-year guarantee? Is further reform planned?
There are no plans for further reform at this time.
25. If the reformed pension policy failed why continue with those schemes?
The reforms which were introduced in 2015 were progressive and increased fairness between the highest and lowest earners.
The Courts found that the ‘transitional protection’ arrangements gave rise to discrimination. This consultation set out proposals to address this.
The reasons for the 2015 reforms remain. After 1 April 2022, all members of the schemes covered by this consultation who are still earning pension benefits will do so in the reformed schemes, so will be treated equally in that respect.
Cost control mechanism
26. What is the cost control mechanism?
The cost control mechanism was introduced in 2015 with the public service pension scheme reforms.
It is used within the valuation process to ensure the costs of public service pensions remain fair for all employees, employers and the taxpayer.
27. Why make members pay the costs to rectify the discrimination against them?
Proposals for addressing the discrimination identified by the courts essentially mean giving members a choice of scheme benefits. This will increase the value of schemes to members.
The cost control mechanism was designed to include costs that impact the value of schemes to members, and so this will need to be considered in the completion of the cost control process for the 2016 valuations.
28. How will the cost control mechanism affect the 2016 valuations?
The Department of Finance will set out in directions the detail of how the cost control process element of the 2016 valuations will be completed.
29. How will the 2016 valuations be affected?
By taking into account this increased value of public service pensions that will result from members having a choice of scheme benefits for the ‘remedy period’, the cost control process will show greater costs than if they were not included. Consideration will be required on how best to take forward the cost control mechanism outcomes for each scheme once the details of these are known.
30. Will members receive improvements to their benefits as expected from the 2016 valuations?
The Department of Finance will set out in the directions the technical detail of how the re-started 2016 valuations will operate.
Details will not be known until the process is complete. By taking into account the increased value as a result of the member choice, the cost control process will show greater costs than if they were not included. Consideration will be given to how best to take forward the cost control mechanism outcomes for each scheme once the details of these are known.
31. If these costs make schemes breach the ceilings, will members and employers see an increase to their contributions?
The Department of Finance will set out in the directions the technical detail of how these costs should be taken into account.
Details will not be known until the process is complete
By taking into account the increased value as a result of the member choice, the cost control process will show greater costs than if they were not included. Consideration will be given to how best to take forward the cost control mechanism outcomes for each scheme once the details of these are known.