The government has revealed it faces a £17bn bill for tackling “unlawful” age discrimination in public sector pensions, with 3 million people set to benefit by an average of more than £5,600 each.

While the announcement spells good news for many teachers, nurses, police officers, firefighters and civil servants, commentators said the huge bill could not have come at a worse time and would almost certainly have to be financed through cuts in spending or higher taxes.

Taxpayers are effectively now having to pick up the tab for mistakes made almost a decade ago when ministers attempted to reduce the UK’s ballooning public sector pensions bill.

In 2010 the coalition government set up a commission to look at what could be done, and later pushed through a series of changes that meant most public sector workers were moved to new pension schemes in 2015. However, these new schemes typically offered less generous terms, prompting anger among many workers and unions.

As part of the changes, the government put in place transitional arrangements that usually meant older workers could stay in the existing, more generous schemes, while younger workers had to transfer to the new schemes.

A group of judges and a group of firefighters decided to take the row to court, arguing that younger people were being treated less favourably, and in late 2018 the court of appeal ruled that the transitional protection offered to some members amounted to unlawful discrimination.

The government eventually accepted the ruling and confirmed it would tackle the problems identified, and is now consulting on how to do this.

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