Before 1997, Gurkhas serving in the British Army received the same pay and benefits as those in the Indian Army. Their pay was lower than the rest of the British Army. Pension arrangements were different. Gurkhas received a pension payable for life, based on accrued service. The Gurkha Pension Scheme paid out sooner than, but at a lower rate to, others retiring from the British Army.
After 1997, Gurkhas became based in the UK and received a supplement to take-home pay, making it equivalent to British soldiers’ pay. Pension arrangements remained as before. It was assumed that Gurkhas would return to Nepal on retirement.
The 2007 Gurkha Offer to Transfer (GOTT) and Armed Forces (Gurkha Pensions) Order 2007 (AFGPO) allowed serving and retired Gurkhas to transfer from the Gurkha Pension Scheme to the Armed Forces Pension Scheme. Their accrued pension based on post-1997 service would transfer on a year-for-year credit. This brought them in line with the rest of the British Army for that period. For service before 1997, the value accrued in the Gurkha Pension Scheme would be transferred as a pension credit. As the pensionable pay of a Gurkha before 1997 was less than other soldiers in the British Army, the pension credit was correspondingly less.
The British Gurkha Welfare Society and two Gurkhas applied for judicial review of the GOTT and the AFGPO. They argued that the two provisions discriminated against Gurkhas on the basis of age and nationality. The High Court found against the Gurkhas.
An appeal was made to the Court of Appeal.
The Court of Appeal upheld the High Court’s decision that the application be rejected. The issues were whether the Gurkhas and their UK comparators are truly analogous and, if so, whether the discrimination was justified.
The Gurkhas had argued that the pension entitlement was based on final salary, regardless of changing circumstances during service. The Court of Appeal thought this was incorrect. It compared the scenario to British officers’ widows’ pensions. Such widows’ pension entitlement could be restricted by conditions set by national authorities. Entitlement could legitimately be restricted to those who are still in service at the time that new provisions are introduced, and fixed by reference to service completed before the new provisions come into force.
The Court of Appeal found that it was reasonable to provide for a transfer of pension rights calculated on a full year basis for service after 1997, but only on an actuarial basis for pre-1997 service. It stated that the 1997 transitionals were not bound to retire in the UK and that if they did, they can usually gain civilian employment.
British Gurkha Welfare Society & Ors, R (on the application of) v Ministry of Defence  EWCA Civ 1098 (13 October 2010)