NEWS
Public sector staff eye legalchallenge
The government could face legal challenges from hundreds of thousands of teachers and doctors following changes to their pension schemes, according to Leigh Day. The law firm, which successfully challenged the government on judicial pensions in the Supreme Court earlier this year, believes teachers and doctors could win a case based on age discrimination if they have been moved into a less beneficial pension scheme, as many have following 2015 reforms across the public sector. It is preparing to bring a claim
on behalf of teachers and doctors against the government with the launch of a dedicated website. Leigh Day also represents around 15,000 police officers, whose claims for age discrimination have been lodged with the Employment Tribunal. As was the case with judges’
pensions, younger teachers and doctors have been forced to move on to a new scheme that is less beneficial than their old scheme. Older teachers and doctors, who are within 10 years of retirement, have been allowed to stay on the old scheme.
Shubha Banerjee, associate at
Leigh Day, said: “We believe that the way the government changed public sector pensions to the detriment of younger doctors and teachers was unlawful and unfair. Nigel Mackay, partner at Leigh
Day, added: “As a result of the Supreme Court ruling in June, the government has run out of options in relation to those judges and firefighters who have brought claims. “However, it has not made any commitments to remedy the issue for any judges or firefighters who have not brought claims, or any other public sector workers, including doctors or teachers, who have been affected by the same changes to their pension policy.” Government changes to
pensions across the public sector in April 2015 were intended to reduce the cost of public sector pensions, but shielded older public sector workers by allowing them to remain in their current pension scheme. Meanwhile, younger workers moved to a lower rate of accrual on their defined benefit pensions. SH
Arcadia CVAs approved
Arcadia Group, the struggling fashion empire controlled by Sir Philip Green, can move forward with restructuring plans after a challenge from US landlords was withdrawn. The company, which includes
brands Topshop and Burton, confirmed on Tuesday that, following constructive dialogue with the two US landlords, they have withdrawn their challenges to Arcadia’s company voluntary arrangements. Following this withdrawal, the
CVAs can be fully implemented, the company has stated. Earlier this year, Lady Tina Green,
PUBLIC SECTOR PENSIONS REFORMS TOOK PLACE IN 2015 BUT WERE MORE DAMAGING FOR YOUNGER WORKERS
Arcadia Group’s majority shareholder, agreed to inject an additional £100m into the Arcadia pension funds to help plug the shortfall, with funding of £25m per year for the next three years plus an additional £25m contribution. She also agreed to invest and additional £50m of equity into Arcadia, and to fund the cost of the amended rental-reduction terms within the CVA proposals announced in June. The deal saved the schemes from
the Pension Protection Fund, but the perilous journey continues. SH
Scheme trustees should act nowto guard against stretched stock market valuations
Trustees and sponsors of defined benefit schemes should increase their asset allocations to alternatives and hedge funds in light of high valuations and stretched yields, Cambridge Associates urged in new research. A recent report warned that UK
pension schemes with a large allocation to publicly listed equities may face bleak prospects with global stock market valuations so stretched.
8 The investment firm
recommended switching to alternative assets such as private credit, private equity and real assets, which may outperform a traditional growth portfolio on a risk-adjusted basis. The greatest opportunities for additional return lie within growth asset classes, with the research pointing to a return differential between top-quartile and median long UK investment-grade credit
FALLEN BY 50 PER CENT
SINCE 1996
OF PUBLIC EQUITY STOCKS HAVE
NUMBERS
managers of just 0.8 per cent, compared with 1.2 per cent in global equities, 3.1 per cent in hedge funds, and 6.2 per cent in global private equity as at December 31 2018. The report states: “Private
investments have become increasingly integral to a well- constructed and diversified portfolio as the number of public equity stocks has fallen by nearly 50 per cent since its peak in 1996.” SH
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