When can Chief Constables change the terms of statutory police pension schemes?

1.             This is a follow up article to my previous article which discussed the way in which the provisions in the Police Pensions Regulations 2015 (“the 2015 Regulations”) unlawfully prevented police officers who were members of the 1987 and 2006 schemes from staying as members of those schemes. That article looked forward to the possibility of the government bringing in new Regulations which gave specific rights to police officers to re-join the schemes from which they had been unlawfully ejected. This article looks at the same issue but asks a different question, namely whether Chief Constables, in their capacities as Police Pension Authorities, are under a statutory duty to change the terms of the police pensions schemes they are operating with a view to removing any unlawful discriminatory effects of the 2015 Regulations.

2.             The police pension scheme is an “occupational pension scheme” for the purposes of the Equality Act 2010 (“EA”) and the PPA is the “manager” of the scheme. Section 61(1) to (3) EA provide:

“(1) An occupational pension scheme must be taken to include a non-discrimination rule.

(2) A non-discrimination rule is a provision by virtue of which a responsible person (A)—

(a)   must not discriminate against another person (B) in carrying out any of A's functions in relation to the scheme;

(b)   must not, in relation to the scheme, harass B;

(c)    must not, in relation to the scheme, victimise B.

(3) The provisions of an occupational pension scheme have effect subject to the non-discrimination rule.”

3.             Hence, in operating the police pension scheme, the PPA is under a statutory duty not to discriminate or to operate any rule of the pension scheme which are discriminatory.  Clearly any provisions in a pension scheme which provide that pensions will only be payable when members reach specified ages could be argued to be unlawful because such rules constitute age discrimination. However, in a statutory scheme, the PPA can rely on s61(8) which provides:

“It is not a breach of a non-discrimination rule for the employer or the trustees or managers of a scheme to maintain or use in relation to the scheme rules, practices, actions or decisions relating to age which are of a description specified by order by a Minister of the Crown”

4.             Whilst s61(8) covers “actions or decisions relating to age which are of a description specified by order by a Minister of the Crown”, that cannot extend to indirect discrimination where the discriminatory effect is not by referable to a provision which is related to age but by referable to another factor[1].  

5.             As the police pension scheme under the 2015 Regulations is an “occupational pension scheme” for the purposes of the EA, it follows that the PPA, as the scheme manager, is required to give effect to the rules of the pension scheme “subject to the non-discrimination rule”.  Thus, unless an exemption applies, the non-discrimination rule must take effect in preference to any discriminatory rules within the scheme. There are a series of exemptions for specified provisions within pension schemes which are permitted, notwithstanding the potential discriminatory effect of the provision: see the Equality Act (Age Exceptions for Pension Schemes) Order 2010. However none of these exemptions appear to be open to a PPA to justify enforcing discriminatory rules in a police pension scheme.

6.             S62 EA covers a situation where the scheme manager does not have power under the terms of the scheme to make changes to the rules of an occupational pension scheme. That is the position with the police pension scheme since the PPA normally has no power to take any decision which departs from the terms of the statutory scheme laid down in Regulations. The remainder of s62 EA then gives powers to the scheme managers, i.e. the PPA, to change provisions in the pension scheme so as to give effect to the non-discrimination rule. It provides:

“Non-discrimination alterations

(1)   This section applies if the trustees or managers of an occupational pension scheme do not have power to make non-discrimination alterations to the scheme.

(2)   This section also applies if the trustees or managers of an occupational pension scheme have power to make non-discrimination alterations to the scheme but the procedure for doing so—

(a)   is liable to be unduly complex or protracted, or

(b)   involves obtaining consents which cannot be obtained or which can be obtained only with undue delay or difficulty.

(3)   The trustees or managers may by resolution make non-discrimination alterations to the scheme.

(4)   Non-discrimination alterations may have effect in relation to a period before the date on which they are made.

(5)   Non-discrimination alterations to an occupational pension scheme are such alterations to the scheme as may be required for the provisions of the scheme to have the effect that they have in consequence of section 61(3)”

7.             This is a powerful provision which is contained in primary legislation. Thus, in principle, it can (and thus must) be used by a PPA to re-write the rules of the police pension scheme to remove any unlawful discrimination. 

8.             The broad effect of the relevant part of the McCloud decision in the Court of Appeal was that permitting older Judges to remain in an established pension scheme (with the considerable financial benefits that they had from being in such a scheme) treated younger judges less favourably than older judges because of their age and that the Secretary of State had failed to show the difference in treatment was designed to achieve a legitimate aim. The Court of Appeal also found that, even if they were wrong and that the transitional provisions did seek to achieve a legitimate aim, the Employment Judge was entitled to reach the conclusion that these provisions failed the proportionality test and were therefore unlawful.  The Government has accepted that the same arguments apply to the provisions which prevented younger police officers from remaining members of the 1987 or 2006 schemes when older officers were permitted to do so.

9.             Thus leaves Chief Constables in a very difficult position. On the one hand, they are obliged to operate the police pension schemes in a non-discriminatory way and thus are not entitled to enforce scheme provisions which amount to unlawful discrimination. On the other hand, Chief Constables are required to operate pension schemes in accordance with the terms of the relevant Regulations and do not normally have any discretion about whether to follow the rules laid down in those Regulations or not. But, in this particular case, there is no dispute that rules which prevented 1987 and 2006 scheme members from being able to continue in those schemes were unlawful, because the Secretary of State has accepted that these rules were unlawful. It is therefore necessary for police officers and Chief Constables to determine whether the obligation to comply with the wording of the 2015 Regulations or the obligation to operate the scheme in a non-discriminatory way takes precedence.

10.         Where there are conflicts between specific statutory duties and obligations under the EA not to discriminate, the usual arrangement is that a person cannot rely on equality provisions to override a public body’s duty to comply with statutory rules. Thus, a person who is required to act in a particular way in order to comply with their obligations under a statutory scheme is generally not acting unlawfully under the EA even if that act would otherwise constitute unlawful discrimination. This exemption is set out in a combination of section 191 EA and Schedule 22. Paragraph 1(1) of Schedule 22 provides:

“A person (P) does not contravene a provision specified in the first column of the table, so far as relating to the protected characteristic specified in the second column in respect of that provision, if P does anything P must do pursuant to a requirement specified in the third column”

11.         Accordingly, if a Chief Constable could bring himself within the provisions of this Schedule, he would be entitled to enforce the terms of an occupational pension scheme made under current regulations even though the enforcement of those rules constituted unlawful discrimination. But there is a problem for Chief Constables in relying on these rules because, for age discrimination, the rules have not been brought into effect by the government.

12.         The relevant table is in paragraph 1 of Schedule 22. It includes the following:

“Specified provision Protected characteristic          Requirement

Parts 3 to 7              Age                                   A requirement of an enactment”

13.         Accordingly, if that provision were brought into effect, it would allow a Chief Constable to rely on the provisions of the 2015 Regulations to take precedence over any duty on the Chief Constable to re-write the rules of the police pension scheme under s62. However the relevant commencement provisions for this part of the EA were the Equality Act 2010 (Commencement No 4, Savings, Consequential, Transitional, Transitory and Incidental Provisions and Revocation) Order 2010 (“the 2010 Order”). Article 2(5) of the 2010 Order provided that sections 61 to 77 came into force.  Article 2(14) then provided that Schedule 22 came into force but it provided:

“Schedule 22 except so far as it applies to the protected characteristic of age in Parts 3 and 7 of the 2010 Act”

14.         S62 is included in Part 5 of the EA. Accordingly, the position appears to be that a person is not able to set up a defence of statutory obligation in a case where the relevant protected characteristic is age and the rules in s61 and s62 are engaged. Age was, of course, one of the relevant protected characteristics relied upon in the McCloud case and was the ground on which the case succeeded.  

15.         It follows that, although this may appear to be surprising, if a claim is made against a Chief Constable that the enforcement of any of the rules of the police pension scheme constitutes unlawful age discrimination, the Chief Constable is not entitled to assert that her obligation to comply with the 2015 Regulations overrides her duty to operate the police pension scheme in a non-discriminatory manner. Further, the Chief Constable has both a power and a duty under s61 and s62 to make changes to any parts the statutory provisions of the police pension scheme which offend against the overriding duty on the Chief Constable to operate the pension scheme in a non-discriminatory manner.

16.         There may well be issues around time limits associated with any complaint but, in principle, Chief Constables appear to have the power to re-write police pension schemes to remove any unlawful discrimination based on age.

17.         The implications of this approach are clearly extensive and officers or former officers are urged to seek specialist legal advice before taking steps in accordance with the thoughts set out above. This article discusses areas of great technical complexity and there may be other views. It does not constitute legal advice and no duty is accepted to any person who acts on the matters discussed above. But, at the very least, it should start a discussion.

David Lock QC

3 June 2020

[1] This is shown by the fact that s61(8) was not referred to in the McCloud judgment: see §32.