Swinney to face MSPs as he 'snubs' retirees in £1.7bn pensions scandal

They have been affected by a High Court ruling in 2018 which found the UK government’s 2015 public sector pension reforms unlawfully discriminated against younger workers.

Pensioners are waiting in some cases for tens of thousands of pounds by way of compensation over the discrimination.

Complaints about the failures of the Scottish Public Pensions Agency were lodged with Mr Swinney by the Jobs Forgotten group of over 500 pensioners calling on him to take action and threatening legal action if the leadership team including the chief executive Stephen Pathirana were not removed in the wake of multiple deadlines being missed.

They accused the SPPA of maladministration and told Mr Swinney that the had "no confidence whatsoever" in the senior leadership team of the agency adding: "I am sorry it has come to this but enough is enough."

But it has emerged that Mr Swinney merely delegated the matter to public finance minister Ivan McKee who has defended the delays.

Ivan McKee (Image: Scottish Government)

Retired police superintendent Martin Gallagher, who leads the Jobs Forgotten group said they had been "snubbed" by Mr Swinney and added: "I think it is high time the First Minister publicly acknowledges this shambles for what it is and make the necessary changes at the SPPA to pay pensioners what they are owed."

Mr Swinney is due to be quizzed about the scandal at First Minister's question, with former Scottish Labour shadow justice secretary Pauline McNeill asking him what the Scottish Government's position is over the delays.

The problems began with a 2018 court case in London called the McCloud judgment, which found that changes made to public-sector pensions in 2015 were unfair to younger workers. Those reforms were designed to save taxpayers money, since people are living longer and pensions were becoming more expensive.

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However, the government let older staff stay on the more generous old schemes, while younger ones were moved to less generous new ones. Judges and firefighters successfully challenged this as age discrimination, and now every public-sector pension scheme in Scotland — from teachers and NHS staff to police and council workers — must fix the unfairness and compensate those affected.

Scotland faces a bill running to £1.7bn to repair the damage which is adding extra financial burdens to the NHS in Scotland, the 32 Scottish local authorities, Police Scotland and the Scottish Fire and Rescue Service, who all rely on taxpayer cash to run.

Scoland's bill to repair the pensions age discrimination damage is estimated at £1.7bn (Image: Damian Shields)

All have now had to increase the amount they pay into their pension schemes for staff, known as employer contribution rates, to cover the extra costs caused by the court ruling.

Employer contribution rates are the percentage of an employee’s salary that an organisation must pay into the pension scheme on top of the worker's own contributions. Higher rates mean that employers – and ultimately taxpayers – have to put in more money.

The Police Pension Scheme employer contribution rates alone have had to rise from 30.2% to 38.7%.

The Scottish Government's pensions agency had 18 months to give pension remedy statements to over 200,000 police, teachers, NHS staff, firefighters and local government workers who were estimated to have been affected with a statutory deadline of March 31, this year.

But of 215,000 people affected by the judgment only around 59,000 received the statements needed to get any kind of compensation by the deadline. As the clock keeps ticking on resolving the pensioner cases it is costing taxpayers millions more in interest — charged at 8% a year. The Herald has revealed that the delays are expected to continue into 2027.

Mr McKee told the group that the "scale of the challenge" in issuing the remedies "cannot be overstated" with workloads increasing five-fold.

He added: "The SPPA has however, invested time and personnel to address this and, while there are issues still to overcome, the agency has introduced new processes that are now beginning to deliver at pace."

He said that the original 18-month deadline was "ambitious" but that the inclusion of a discretion to extend the deadlines "was merited".

Mr Gallagher said: "When the second official deadline set by the SPPA of July 31 was missed we wrote collectively to the First Minister.

John Swinney received complaints from retirees about Scotland's pensions scandal (Image: Damian Shields)

"We finally expected some help but instead of Mr Swinney meeting us, instead we finally got time with Ivan McKee. He met us accompanied by the SPPA chief executive.

"In our meeting various promises were made and they proposed regular update meetings. Despite contacting them twice since, we have not even had an acknowledgement of the minutes we produced.

"Is this how Scotland looks after those who served its communities?"

The Scottish Government spokesperson said that Mr McKee, had portfolio responsibility for the SPPA and has been clear with the agency that "he wants these matters to be resolved as quickly as is practicable".

They said statements had so far been issued to around 100,000 active members, those currently paying into a pension, across the SPPA administered schemes, with a further 11,000 statements to eligible members who are retired.

A spokesman said: "The Scottish Government has increased the budget allocated to the SPPA year on year to support the delivery of the remedy, including approving SPPA’s budget requests for this year.

“The SPPA is taking on new administrators as quickly as possible – growing the workforce by more than 30% - to help release experienced staff to focus on the complex calculations required to support work on remedy.

"The SPPA are working towards delivering the bulk of statements by the end of 2026."