To most people (other than a select few like me who need their head checked) the topic of pension advice is not the most captivating. However, the fact that it is not a particularly sexy subject should not detract from the impact that it can have on someone’s life.
Victims of negligent pensions advice can see their life savings wiped out in an instant after years of hard work and planning.
One group who have been disadvantaged in this way are employees of the Scottish Prison Service (SPS).
In January 2019, the SPS issued a Staff Notice to all staff employed before 1 November 1987. The purpose of the Notice was to alert employees to the fact that advice the SPS had previously issued, in respect of their occupational pensions, was wrong. The Staff Notice was followed up by individual letters to a number of individuals who had been affected.
In order to fully understand the impact of the negligent advice, it is important to provide some background.
Under the Principal Civil Service Pension Scheme (“Classic Scheme”), once a prison officer reached 20 years’ service, each subsequent year of employment would count as two towards their final pension pot. These benefits (which I will refer to as “reserved rights”) are regularly referred to as “doubling”. The overall effect is that it would allow an officer to maximise his or her pension, retire at the earlier age of 55 and enjoy their full pension without any reduction or penalty.
Prior to January 2019, the advice given to prison officers by the SPS was that if they transferred from an eligible role (which attracted reserved rights) to an ineligible role (which did not attract them) then they would lose their reserved rights on a permanent basis. Based on this incorrect advice many officers decided to transfer from an eligible role to an ineligible role in order to progress their career and move up the promotion ladder at the expense of their reserved pension rights.
Some time prior to January 2019 the Cabinet Office issued “new” guidance to the SPS - the advice they had previously given was wrong. The Cabinet Office clarified that the correct application of the Classic Scheme rules was that an employee who has previously held reserved rights status, but who lost that status as a result of a move to role that was not eligible, could in fact regain those reserved rights if they had decided to move back to an eligible role before a specified date.
Unfortunately the clarification from the SPS came too late for many of those affected because the specified date had already passed i.e. they were unable to move back to an eligible role and regain their rights.
In essence, the negligent advice given by the SPS has resulted in a group of prison officers who have not only suffered a significant financial loss from losing their reserved pension rights but also had to continue working past the age of 55 in an attempt to mitigate the damage.
A number of the officers affected chose to pursue a complaint through the internal grievance procedure only to be told that, while the SPS fully accepted that the advice given was wrong, it had not resulted in any loss and so no compensation would be paid.
Well you don’t need to be an expert on pension advice to agree that it is an incredible way to treat a group of workers who have risked their lives over decades of loyal service.
We are instructed to act on behalf of a number of prison officers and are now in the process of raising court proceedings against the SPS in the Court of Session.
The exact number of prison officers affected is unclear. There are potentially a significant number of retired officers who are not aware that they may have a right to claim compensation and our hope is that by publicising this issue we can continue to campaign for justice for those affected.
Further information on Financial Mis-selling can be found here.
Scots prison guards in legal action threat against jail bosses over £100k pension blunder - BBC News 30th May 2021
Blog by Kieran Smith, Solicitor