What does the McCloud judgement mean for independent schools?

Public sector pensions may seem different to those in schools, but appearances can be deceiving

Do you use the post-11 April 2015 section of the Teachers' Pension Scheme (England and Wales) or the Scottish Teachers Pension Scheme 2015 for any of your staff? If so you may be interested in this article about firefighters winning their age discrimination case (the McCloud judgement).

The McCloud judgement

Following this judgement the Government confirmed it will apply whatever changes are needed as a result of this across all the main public service pension schemes that made similar changes (e.g. increased retirement ages, switched to a career average scheme basis and reduced accrual rates).

This includes the Scottish Teachers’ Pension and Superannuation Schemes and in England and Wales the Teachers’ Pension Scheme, regardless of whether any legal claims have yet been lodged.

What about independent schools?

In the public sector it's very likely the Government will pick up the resultant multi £ billion cost of these changes, but as yet we haven’t seen any commentary on the implications for private sector employers/Independent Schools that participate in the Scottish Teachers Pension Scheme 2015 or the post-11 April 2015 section of The Teachers’ Pension Scheme.

It seems inevitable that there will be implications, though: these will likely be mandatory scheme changes to address what has been ruled as unlawful age discrimination, so it’s probably just a matter of time before it filters through to private sector employers, including independent schools.

Review pension contribution rates

Now that the legal position has been confirmed, the Government’s appeal request declined and some declarations have been made, the next step is for the relevant Employment Tribunals to prescribe how and when the discrimination will be remedied and changes taken forward elsewhere.

In addition we expect impacted pension schemes to review their contribution rates in light of this judgement, when next scheduled for review in 2023 if not sooner. This is because pre-2015 members typically had higher accrual rates and earlier normal retirement dates than the 2015 schemes. It means there is a significant cost that needs to be covered on an ongoing basis, over and above any remedial payments for memberships from 2015 to date.

To find out more please visit our comprehensive web resource: A complete guide to pension challenges faced by independent schools'

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