The government has announced that the pause of the cost control mechanism will be lifted, and the cost control element of the 2016 valuations process will be completed, which NAHT will be feeding into.

The costs of addressing the discrimination identified in the McCloud judgment will be included in this process. 

What is the cost control mechanism?

The Independent Public Service Pensions Commission recommended in 2011 that the new public service pension schemes should include an employer cost control mechanism to protect taxpayers from unforeseen increases in scheme costs. While the commission recommended a mechanism to protect the taxpayer from increased cost, the final negotiated mechanism is symmetrical and so also maintains the value of pensions to members when costs fall.

Why was the mechanism paused?

In January 2019, following the Court of Appeal's judgment in the McCloud and Sargeant cases, the government announced a pause to the cost control element of the 2016 valuations. The government argued that the uncertainty around member benefits arising from the court judgments made it impossible to assess the value of the schemes to members with any certainty.

Following the publication of the McCloud consultation, the uncertainty about scheme benefits that arose as a result of the McCloud judgment has now been reduced.

The government therefore announced in July 2020 that the cost control mechanism would be un-paused and the cost control element of the 2016 valuations would be completed.

NAHT will ensure that member views are raised with the Department for Education in relation to this through their participation in the Scheme Advisory Board.

Public service pensions: cost control mechanism consultation

In light of the impact of the McCloud judgement, and previous outcomes from the mechanism, the government has launched a consultation seeking views on three changes to the mechanism, which NAHT will be submitting a response to.