Public Service Pensions Act 2013 Explanatory Notes

Public Service Pensions Act 2013

2013 CHAPTER 25

Commentary on Sections and Schedules

Procedure for scheme regulations

Section 22: Procedure for protected elements

140. The Chief Secretary to the Treasury said in a statement to the House of Commons on 20th December 2011 that the reforms legislated for under this Act are designed to last for at least 25 years. He announced his intention to include provisions in primary legislation that will ensure a high hurdle is set for future governments to change the design of the schemes. The enhanced consultation and report procedure for changes to protected elements of a scheme for a period of 25 years are the Government’s way of giving effect to that commitment.

141. Subsection (1) sets out that the process in subsections (2) to (4) is to be followed in the event that the responsible authority wishes to make changes to the new public service pension schemes that impact on certain elements (the “protected elements”) which have been identified for enhanced protection. Those elements are protected from modification until 31st March 2040 (the “protected period”) unless the process is followed. “Protected elements” and “protected period” are defined in subsection (5).

142. Subsections (2) to (4) set out the two parts of the required process. Where a change is proposed to the protected elements during the protected period, the responsible authority must consult those who appear likely to be affected with a view to reaching agreement with them and must lay a report before the appropriate legislature (defined in subsection (5)). The requirement to consult with a view to reaching agreement is a higher standard than applies under section 21.

143. The responsible authority proposing the change must consult those who appear likely to be affected, either directly or through their representatives (subsection (3)).

144. Subsection (4) provides that the report to the appropriate legislature must say why a modification to a protected element is proposed within the protected period, having regard to the general desirability of not making such changes in that period.

145. Subsection (6) creates an exception for changes to the protected elements that are caused by the operation of the employer cost cap under section 12 (see section 12(6), which envisages consultation resulting in an agreement to implement such changes, unless agreement cannot be reached and a default change is applied). Subsection (7) provides that where section 22 applies, there is no requirement to consult under section 21 (this is to prevent duplication of the requirement to consult set out in that section).