John Swinney faced the music at First Minister’s Questions today after the Herald revealed how a pensioners group threatened legal action if heads do not roll for failures in providing remedies to up to 300,000 Scots police, teachers, NHS staff including nurses, firefighters and local government workers.
They have been affected by a High Court ruling in 2018 which found the UK government’s 2015 public sector pension reforms unlawfully discriminated against younger workers.
Pensioners are waiting in some cases for tens of thousands of pounds by way of compensation over the discrimination with an admission that the latest October 31 deadline to deal with the issues will be breached.
Complaints about the failures of the Scottish Public Pensions Agency were lodged with Mr Swinney by the Jobs Forgotten group of over 500 pensioners calling on him to take action and threatening legal action if the leadership team including the chief executive Stephen Pathirana were not removed in the wake of multiple deadlines being missed.
They accused the SPPA of maladministration and told Mr Swinney that they had “no confidence whatsoever” in the senior leadership team of the agency adding: “I am sorry it has come to this but enough is enough.”
Mr Swinney was quizzed about the scandal at First Minister’s Questions, with former Scottish Labour shadow justice secretary Pauline McNeill asking him what the Scottish Government ‘s position is over the delays which she described as a “national scandal”.
Former Scottish Labour shadow justice secretary Pauline McNeill grills the First Minister over the pensions scandal (Image: Scottish Parliament TV)
But he ducked a call from the MSP to bring forward action to issue the remedy remedy statements to public sector pensioners.
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He said that the ruling affected pensions across the UK and that of 215,000 people affected in pension schemes overseen by the SPPA – 65,000 were already retired.
And he said many would already be getting their best pensions.
He indicated that interest payment penalties for delays would be paid by the UK government.
Ms McNeill told him: “This has been described by those affected as a national scandal, and it is. Public sector workers, including nurses, police officers, firefighters and local government workers are still to receive pension funds amounting to tens of thousands, seven years on from the judgment on pension discrimination.
“It has broken at least two statutory deadlines, but tomorrow, it will miss a third deadline, and delays are now expected to run until 2027.
“But every year, a deadline is missed as a cost to the taxpayer in interest payments of eight per cent. Does the First Minister agree with me that after seven years, it is unacceptable that the SPPA have not put this right, and given it is a government agency, I ask the First Minister, what action is he prepared to take to bring forward the work required to issue remedy statements to pay public sector pensioners on time, and what further redress is he going to provide for those impacted by the debacle.”
Mr Swinney responded: “I do agree with that point, and what I would provide is reassurance that when the remedy letters are issued, they will give a choice that enables a higher pension.”
He said that public finance minister Ivan McKee would be taking up the issue and that the workforce of the SPPA had now been increased by more than 30%.
The problems began with a 2018 court case in London called the McCloud judgment, which found that changes made to public-sector pensions in 2015 were unfair to younger workers. Those reforms were designed to save taxpayers money, since people are living longer and pensions were becoming more expensive.
The First Minister responds to concerns over Scotland’s public pension scandal (Image: Scottish Parliament TV)
However, the government let older staff stay on the more generous old schemes, while younger ones were moved to less generous new ones. Judges and firefighters successfully challenged this as age discrimination, and now every public-sector pension scheme in Scotland — from teachers and NHS staff to police and council workers — must fix the unfairness and compensate those affected.
Scotland faces a bill running to £1.7bn to repair the damage which is adding extra financial burdens to the NHS in Scotland, the 32 Scottish local authorities, Police Scotland and the Scottish Fire and Rescue Service , who all rely on taxpayer cash to run.
All have now 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.
Employer contribution rates are the percentage of an employee’s salary that an organisation must pay into the pension scheme on top of the worker’s own contributions. Higher rates mean that employers – and ultimately taxpayers – have to put in more money.
The Police Pension Scheme employer contribution rates alone have had to rise from 30.2% to 38.7%.
The Scottish Government‘s pensions agency had 18 months to give pension remedy statements to over 200,000 police, teachers, NHS staff, firefighters and local government workers who were estimated to have been affected with a statutory deadline of March 31, this year.
But of 215,000 people affected by the judgment only around 59,000 received the statements needed to get any kind of compensation by the deadline. As the clock keeps ticking on resolving the pensioner cases it is costing taxpayers millions more in interest — charged at 8% a year.