01/08/2023
The Government has recently published its response to the consultation on the McCloud remedy implementation in respect of the Firefighters’ Pension Scheme (FPS). In doing so, the Government has recognised the need to address the elephant in the room, that is, how will the McCloud and Matthews remedies work collectively? Such a question has been long troubling Fire and Rescue Authorities (FRAs) and Local Authorities (LAs) alike. However, the government’s brief advice on the subject is unlikely to settle the practical and logistical concerns of scheme administrators.
The Matthews Remedy
The 'Matthews remedy' arose from the judgment in Matthews and others v Kent and Medway Towns and Fire Authority in 2006 which allowed retained firefighters who were employed between 1 July 2000 and 5 April 2006 to join the FPS 2006 with retrospective effect as special members (previously they were excluded from the FPS which then only applied to full-time firefighters). There was subsequently an initial ‘options exercise’ undertaken by FRAs and LAs to allow existing and former retained firefighters with the relevant service retrospective access to the scheme up to 1 July 2000. However, following this, the Court of Justice of the European Union later ruled in 2018 that service should be backdated prior to 1 July 2000. The remedy to rectify this comes in the form of a ‘second options exercise’ with the relevant legislation coming into force on 1 October 2023.
The McCloud Remedy
Following reform of public service pension schemes under the Public Service Pensions Act 2013, it was found that the transitional protection arrangements given to older members was age discriminatory in the 2018 Court of Appeal’s judgment in Lord Chancellor v McCloud. Subsequently, the McCloud remedy seeks to rectify this discrimination by extending the ‘underpin’ protection to younger workers who were unlawfully excluded from this mechanism previously.
Double Trouble Ahead?
Given that the Matthews remedy period deals with a member’s service up to and including the 31 March 2015 and the McCloud remedy period is in relation to accrued service between 1 April 2015 and 31 March 2022 (inclusive) particular thought must be given to how these two remedies will interact in practice.
The government’s response envisages that the Matthews remedy will have to be implemented initially so that when it comes to applying the McCloud remedy the member has already been placed into the correct scheme as of the relevant date (31 March 2012) which will subsequently provide them with the requisite eligibility for the McCloud remedy.
This means that with both remedies having an implementation date of the 1 October 2023, FRAs and LAs have the task of preparing and reviewing data on eligible members as well as ensuring that they are in a position on 1 October 2023 to run two simultaneous corrective exercises. A significant administrative burden currently rests on these bodies to ensure that they are fully prepared to implement both remedies, particularly taking into account the logistical and practical considerations of implementing the Matthews remedy first. It is therefore paramount that members who are eligible for both remedies are correctly identified. Principally, this involves identifying those individuals in scope for the Matthews remedy, and then subsequently considering whether these individuals will also be impacted by the McCloud remedy. Such preparation for this may also include sending communications to the relevant individuals prior to the implementation date to begin the process of engagement. It is important that these individual cases are identified promptly so that the McCloud remedy option can be provided to these individuals in good time following the 1 October 2023.
In addition to this, the government noted that special provision has been made to allow firefighters who elect to purchase service under the Matthews remedy and who were not members of the 2015 Scheme on 1 April 2015 to have entitlement to buy back service from the 2015 Scheme under a contingent decision (a contingent decision is one taken by a member relating to their membership that would have otherwise been different had it not been for the discrimination). Essentially, what this provides is an ability to include service during the remedy period in the modified pension scheme.
For further help and advice, please contact Nigel Bolton.
