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U.K. pension fund valuations that lowered some participants benefits halted after ruling

The U.K. government intends to halt valuations of public-sector plans following a court ruling, said Elizabeth Truss, chief secretary to the U.K. Treasury, said in a written statement Wednesday.

The U.K. Court of Appeal ruled in December that some public-sector plan participants were unlawfully discriminated against in terms of their level of benefits as a result of the 2015 reforms that saw most of the public-sector workers move to new retirement plans.

Because a valuation mechanism introduced by the reforms triggers automatic changes to benefits, the court ruling could result in a £4 billion ($5 billion) cost to plan sponsors annually, according to the statement.

Sponsors of underfunded plans intended for changes in employer contributions enabled by the reforms to be implemented in April 2019. However, due to uncertain impact of the court ruling, it is not possible to assess the value of the current public-sector pension arrangements with any certainty, the government said.

The Treasury is in the process of allocating funding to departments to help with these costs, the statement said. "We will implement the changes to employee benefits as planned," Ms. Truss said. However, employees who were transferred to new plans following the reforms will have to be compensated if the government is unsuccessful in obtaining permission from the court to appeal the decision further.