Teachers may meet cost of McCLoud remedy in pension scheme

Teachers say it “beggars belief” that the government is proposing they should pay “tens of millions” in remedying an illegal age discrimination practice in the Teachers’ Pension Scheme.

It’s estimated that teachers could be owed around £7 billion pounds after the government was defeated in the Court of Appeal with the McCloud judgement, which found discrimination based on changes introduced to the TPS in 2015 in which teachers closer to retirement were allowed to remain on more beneficial final-salary arrangements.

But the NASUWT has highlighted that the money owed to older teachers will be paid out of cash meant for improving the accrual rate of the TPS – and therefore teachers will miss out on the benefits of this money, including mostly new teachers who the McCloud judgement does not apply to, who are therefore facing new discrimination.

Under changes to the TPS in 2015, teachers who were more than 10 years away from retirement were moved from final-salary schemes to average salary schemes.

However, a consultation launched by the Treasury now outlines plans to implement the McCloud judgement and give them the option of going back onto the old scheme until 2022.

The NASUWT estimates that around 80 per cent of eligible members will return to the old scheme, and that some will be better off by tens of thousands of pounds.

However, it says members on the current average-salary scheme will subsequently face a slower pensions accrual rate, including teachers who started after April 1, 2012, who the McCloud judgement does not apply to.

It says they could collectively stand to lose “tens of millions” by not receiving improvement in accrual. For example, a teacher on MPS 6 on a salary of £35,971, would lose around £435 per year in accrual. 

NASUWT general secretary Patrick Roach said: “Teachers will be dismayed by the Government’s proposals to remedy the McCloud judgment, which found that the Government’s 2015 reforms to the Teachers’ Pension Scheme were discriminatory on grounds of age.

“It beggars belief that the Government is proposing that teachers should meet the cost of proposals that the Government is implementing as a result of a legal case which it lost.”

Documents published by the Treasury show that the money to remedy the discrimination will be paid out of Treasury’s “Cost Control Mechanism” pot, which, the NASUWT points out, was built up by lower than anticipated pension rises between 2012 and 2016 (due to public sector pay caps and freezes) and was supposed to have been spent on improving the accrual rate of the TPS from April 2019 through to March 2023.

A NASUWT national spokesperson said: “From our perspective this [the Cost Control Mechanism money] is something that teachers should have got that they didn’t get, and the government has now decided they can make use of that money to implement the McCloud judgement.

“If I was a younger teacher I’d be pretty annoyed. For younger teachers who started after April 1, 2012, their salaries would have been held back because of the pay caps, and as a result of that they should have been getting a pension from April 2019 onwards that was growing more quickly. But now they won’t be getting that, or certainly they won’t receive what they would have received, because the money is being used to settle the government’s legal problems.

“But at the same time, there are older teachers who will be better off by tens of thousands of pounds.”

He added: “We think the Government runs the risk of more legal action. What we’re saying is that the government hasn’t removed discrimination from the scheme.”

The Treasury and the DfE has been contacted for comment.