Annette Ellis v The Cabinet Office – 6 June 2014

In this appeal against a PO decision, the High Court found that:

  • the PO had taken into account irrelevant factors in its decision and
  • it had wrongly interpreted provisions of the Principal Civil Service Pension Scheme (PCSPS).

The High Court concluded that, despite the transfer of her employment to a private contractor, Ms Ellis remained entitled to retire at age 55 without a reduction being applied to her pension.


Ms Ellis became a prison officer in May 1986.  She joined the “Classic” section of the PCSPS and had a right to retire at age 55 without a reduction in pension provided that she was then in service.  She was also entitled to double service counting after the first 20 years of her service, i.e. after 20 years, each further year counts as two for the purposes of accruing pension rights.

In 1987 a new scheme was introduced but Ms Ellis’ pension rights (past and future) were not affected.

In 2011, Ms Ellis was informed that she was going to be transferred under TUPE to a private sector contractor (G4S).

TUPE transfers in the public sector

Broadly, TUPE transfers the employment obligations of the former employer, in respect of the transferring employees, to the new employer.  But, in general, pension benefits do not transfer to the new employer as TUPE contains an exemption in respect of benefits under occupational pension schemes relating to “old age, invalidity and survivors”.

In January 2000 the Cabinet Office issued a document called “Staff Transfers in the Public Sector, Statement of Practice Guidance”.  this is generally called “the Fair Deal”. The Fair Deal sets out how public sector organisations should apply government policy in the treatment of bulk transfers between the public and private sector.  In broad terms, the Fair Deal  requires the private contractor to provide pension arrangements which are at least “broadly comparable” to the public sector pension scheme the staff are leaving.  The transferring employees must then be given the option of transferring their accrued pension benefits to the contractor’s “broadly comparable” scheme.

The pension options

Prison staff were given three options in respect of their pension benefits:

  • Retain their benefits in the PCSPS.
  • Transfer their benefits from the PCSPS into G4S’s “broadly comparable” pension scheme.
  • If they were over age 50, they could draw their pension with effect from the date of transfer.

The last option was not open to Ms Ellis as she was not over age 50.

The PCSPS rules state that a member who “resigns or opts out of the scheme” without transferring their benefits is entitled to a preserved pension and lump sum at age 60.  Under the terms of the PCSPS, Resignation means “termination of service or voluntary retirement from the Civil Service before the pension age”.

Ms Ellis was told that if she chose the first option, under the rules of the PCSPS she would not be able to take her deferred pension unreduced until the age of 60.  However, were she to transfer, G4S’s scheme would give her a right to retire unreduced at age 55.

The claim

On 1 October 2011, Ms Ellis’s employment was transferred, under TUPE, to G4S.  Due to her concerns about the G4S scheme, Ms Ellis opted to leave her pension in the PCSPS.

Ms Ellis brought claims through the PCSPS’s IDRP and to the PO that, under the rules of the PCSPS, she remains entitled to retire unreduced from age 55.  She argued that she had not “resigned” from her employment in any normal sense of the word.  She was still working at the prison and wished to continue to do so until she was entitled to a full pension.

Proceedings to date

The IDRP and the PO concluded that Ms Ellis was not entitled to an unreduced pension from age 55.  Their key finding was that her transfer to G4S terminated her service with the Prison Service (now National Offender Management Service) and that termination of service is treated as resignation under the PCSPS rules.

High Court

Mrs Justice Rose considered that the PO’s decision misconstrued the meaning of the term ‘resignation’.  The PO had “effectively held that the word ‘resignation’ when it appears in the rules must mean any termination of service, even if does not fall within the commonly used meaning of the term ‘resignation'”.

The judge noted that it is possible for terms to be defined in documents as more broad or narrow than their ordinary meaning, but considered that there was no indication that this was intended here.  She also found such an interpretation to be inconsistent with the structure of the rules; section 3 deals with various different ways of someone ceasing to be in employment and sets out how the scheme applies in each situation.  There was also nothing to suggest that the definition of ‘resignation’ or the application of the rule in question was intended to operate as a sweep-up provision to cover anything which was not covered elsewhere in the rules.

In addition, Mrs Justice Rose considered that treating Ms Ellis as having resigned in a way which reduces her pension entitlement was inconsistent with the Government’s policy on TUPE transfers in the public sector.

Finally, the PO was found to have taken into account irrelevant factors as he stated as one of his reasons the fact that Ms Ellis had the option of transferring to a broadly comparable scheme (which would have preserved her right to retire unreduced at age 55) and chose not to do so.  Mrs Justice Rose concluded that this fact has no bearing on the question of the rights Ms Ellis is entitled to under the PCSPS.  Similarly, the fact Ms Ellis was told she would lose the right to retire unreduced were she not to transfer did not prevent her succeeding in her complaint.

Ms Ellis’ appeal was allowed.


We understand there have been many transfers from the PCSPS conducted on the basis of the rules set out in the Fair Deal. These transfers may now need to be re-examined.  The circumstances of the case are unusual.  Unlike many, Ms Ellis chose not to transfer her benefits.  She was also eligible for the 1972 provisions which apply to prison officers who joined the PCSPS before  1 October 1986).  These gave her the right to retire at age 55 with an unreduced pension, provided she remained in service.

In addition, the new Fair Deal published in 2013 will negate the effects of this ruling as it represents a major shift in policy.  Under the new Fair Deal public sector workers will be permitted to remain as members of their public sector scheme for future service rights – meaning that the separation of past and future service rights which led to this case is unlikely to happen in future.

We understand the Cabinet Office is seeking permission to appeal to the Court of Appeal.