Coventry taxpayers face £12 million bill over landmark court ruling

[dutchman]

Council's across the country will face the pinch from the landmark McCloud judgement



An estimated £12 million must be pumped into Coventry City Council’s pension liability pot as a result of a landmark court ruling set to hit the public purse.

Councillors were informed of the news on Monday, the same day the government warned the ruling will cost the public sector a huge £4bn nationwide.

It comes after the government had an attempt to appeal a court decision – known as the McCloud judgement – quashed by the Supreme Court on June 27.

A group of judges and firefighters won the landmark court case last year, which argued changes in pension schemes amounted to unlawful age discrimination.

The government moved most public sector workers into new pension schemes in 2015, but this meant workers close to retirement age could stay in existing and more generous schemes, however younger workers had to transfer to new – less lucrative – schemes.

A subsequent ministerial statement on Monday (July 15) estimated that remedying the discrimination will add around £4bn per year to scheme liabilities from 2015.

Public sectors affected include schemes for the NHS, civil service, local government, teachers, police, armed forces, judiciary and fire and rescue workers.

Its impact on Coventry was discussed at an audit and procurement meeting on Monday.

Outlining a £12m pressure, which could rise or drop by £1m, Mark Stocks, from council auditors Grant Thornton, said: “We don’t have to find it all in one [year].

“My understanding is that those who are retired it is solely your responsibility [to contribute].

“Those who are impacted by this who are continuing to gain contributions under the scheme then it will be a shared responsibility [with the council].”

Finance manager Paul Jennings said it was “too early” to know where the costs will come from, adding “it could easily be another 12 months before we start to get some answers”.

However, recalculation of the council’s pension liabilities will affect the council’s budget setting next year, seemingly impacting spending elsewhere.

A council spokesman said after the meeting: “The judgement is likely to increase the value of pension liabilities for local authorities across the country and an initial estimate by the council’s pension actuary is that the increased cost for Coventry City Council will be £12m. This compares with the existing liability of £542m.

“Currently, Coventry City Council’s arrangement with the West Midlands Pensions Fund means that it is allowed to pay back these liabilities over a period of 19 years."