Some pensioners have died still waiting for answers, while others are threatening legal action if those responsible are not removed.

Around 300,000 police, nurses, teachers, firefighters and council staff are caught up in the scandal, most of them relying on the Scottish Public Pensions Agency to fix the costly blunder.

The crisis began with a 2018 court case in London, called the McCloud judgment, which found that the UK government’s 2015 pension changes unfairly treated younger workers.

What is the McCloud case all about?

In 2015, new pension schemes were introduced for public-sector workers – teachers, NHS staff, local government employees, police officers and firefighters.

The idea was to make schemes fairer and more affordable for taxpayers because people were living longer, which meant the old pension deals were becoming expensive.

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Under the reform, older workers, near retirement, were allowed to stay in a more generous old pension scheme, while younger ones moved to a less generous scheme.

The courts later ruled that this was age discrimination, because younger members were treated less favourably simply for being younger.

That court decision is known as the McCloud judgment. The Scottish Government is now having to oversee the provision of a remedy for the discrimination. by way of compensating those affected.

Why does this matter for Scotland’s public pensions?

Although the case started in England, the implications have rippled out to Scotland because the nation’s taxpayer-backed schemes followed the same broad structure.

As the discrimination happened here too, the Scottish Government and its pensions agency, the Scottish Public Pensions Agency (SPPA), must now effectively compensate those pensioners discriminated against.

That means recalculating, back dating and potentially increasing the pension entitlements of hundreds of thousands of public-sector staff in Scotland – from nurses and teachers to police officers and council workers.

Why is it being described as a £1.7 billion bombshell

The figure refers to the estimated extra cost that the Scottish public sector including the NHS, councils, Police Scotland and the Scottish Fire and Rescue Service has to cover as a direct result of the remedying the discrimination.

This is extra money has to be found from the taxpayer-backed schemes – for the seven-year “remedy period” between April 1, 2015, and March 31, 2022.

It means that Scottish pension schemes are facing a significant additional burden — money that was not originally budgeted for — because benefits now must be adjusted to correct the unfairness.

The financial impact hits every level of public service – councils, hospitals, schools, police and fire services – when budgets are already tight.

What’s the difference between the old and new pension schemes?

The schemes involved taking council workers, teachers, NHS staff, police and firefighters away from “gold-plated” pensions which were based on the final salary at or near retirement.

So if a worker had 30 years of service and retired with a final salary of £40,000, the pension would end up being a fixed percentage of that — for example 1/60 of salary for every year worked, which would amount to £20,000 a year.

But the replacement CARE or Career Average Revalued Earnings schemes were based on typical earnings over a worker’s whole career, which in the many would be mean getting less.

The changes would also mean that people would have to retire later and was usually linked to the State Pension age.

So people forced into the new scheme lost out – and that is why the courts ruled it unfair that older workers were protected but younger ones were not.

How are people being compensated?

This is the “remedy” part. For most schemes benefits are being recalculated between 2015 and 2022.

If someone would have been better off under the old, generous final-salary scheme, which is more often than not likely, their pension is adjusted to match it.

If they’d do better under the newer scheme, pensioners have been given the choice to keep that.

But working out what is owed is said to be extremely complicated as every member’s pay and service history needs to be checked. And that is why it is taking so long.

Which Scottish pension schemes are affected?

The SPPA manages four main schemes affected by the McCloud ruling – the NHS Pension Scheme (Scotland), Teachers’ Pension Scheme (Scotland), Police Pension Scheme (Scotland) and the Firefighters’ Pension Scheme (Scotland).

In addition, the Local Government Pension Scheme (Scotland) – administered by 11 local funds and overseen by councils including the Strathclyde Pension Fund – is also affected but operates differently.

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Altogether, hundreds of thousands of Scottish public-sector workers and pensioners are potentially affected.

So who pays for all this?

Ultimately for the most part, the taxpayer does.

Pension schemes overseen by the SPPA have had to increase the amount they pay into their pension schemes for staff, known as employer contribution rates, to cover the extra costs caused by the court ruling.

That means Police Scotland, Scottish Fire and Rescue Service, the NHS and councils must and are paying more into their schemes.

For uninvested schemes covering police, firefighters, teachers and NHS, the extra money has to come from budgets bolstered by the taxpayer.

Is this the end of the story?

Not yet. Implementing the McCloud remedy is a massive task. The SPPA has to issue pension statements to affected members but there have been delays.

Under legislation, the issuing of these was due to be complete in 18 months leaving a deadline of March 31. But that has not been met and tens of thousands of pensioners are still waiting for their remedy statement. Without that they cannot get their money.

Retired members have up to 12 months on receipt of their statements to make their choice and, as of mid-August, 50% have notified the SPPA of their choice. These individuals will receive a lump sum payment for any money due, which will include backdated interest payments. If applicable, monthly pension payments will also be amended.