Pension claims see equal pay bill soar to £1bn

SCOTLAND’S largest council is facing an additional multi-million pound bill to settle equal pay claims with female staff as they are now demanding that pensions are included in any settlement.

In total, 11,500 current and former employees are pursuing claims against Glasgow City Council after the Court of Session last year ruled that a 2007 pay deal discriminated against female employees.

It has been estimated that the council could have to pay around £500 million to compensate female workers for being paid less than men for carrying out equivalent jobs in the intervening years.

However, the lawyer representing the majority of the women said that in addition to receiving a lump sum and having their pay grade reassessed, the women must be given the opportunity to increase their pension pots too.

Stefan Cross QC of Action 4 Equality Scotland, which is acting for 7,500 women, said: “At the moment we are only discussing process with Glasgow City Council and not the details at all, but pensions would be a red line for us. If they don’t agree to it being pensionable then we won’t have an agreement.

“People don’t realise that because men are getting more pay they are getting more pension. This discrimination is baked in for a lifetime.”

As with all defined benefit pensions, members of the Local Government Pension Scheme pay a proportion of their salary into the pot each month and receive a retirement income that is linked to what they earned while they were working.

Until 2015 that income was based on employees’ final salaries, but a change made to the scheme at that point means it is now worked out on the average amount they earned during their time at the local authority. That has brought pensions into

sharper focus for anyone with an equal pay claim.

This is because prior to the change if a woman who was still working had her pay re-rated then when she retired her final salary would be at the correct level to base her pension on.

Compensating employees for being under paid and moving them onto the correct pay band now does not alter what they were paid in the past, though, meaning that under career-average arrangements female employees’ pensions will be too low.

In addition, anyone who has already retired on the final salary scheme will be receiving an incorrect pension.

In order to make equal pay settlements pensionable both the council and the affected employees would have to make additional payments to the pension scheme, although Mr Cross said the outlay would work in the claimants’ favour.

The move could see the total bill rise to £1 billion.

In a similar case he took on behalf of female employees of Birmingham City Council, Mr Cross said that one retired woman made additional pension contributions of £3,500 but received £34,000 in back pension payments and saw her retirement income increase by £15,000 a year.

GMB Scotland organiser Hazel Nolan said that pensions are “a huge part of our claim” because “what the women get back in pensions could be larger than their payout”.

Unison regional manager Peter Hunter added: “Our core argument is that the women should be getting this money now but that they should have been getting it 10 years ago.

“If they got it as payment then it would have been pensionable and in the negotiations we will be insisting that the claimants get information about their rights to get it treated as pensionable pay.”

A spokesman for the council said: “At this early stage, nobody involved knows what any negotiated settlement will look like, these are all matters that will be up for proper discussion over this year.”

It is thought that Glasgow will be forced to view the pensions issue favourably given that North Lanarkshire Council was in June 2016 ordered to make its own equal pay settlement pensionable by the Scottish Government’s Scottish Public Pensions Agency.