Launch of another McCloud consultation

14 April 2023

The government will launch a new consultation on proposals to remove unlawful age discrimination in the Local Government Pension Scheme (LGPS).

The LGPS is a public service pension scheme and its rules are made with the approval of parliament. In April 2014, the LGPS in England and Wales became a career average earnings scheme and was reformed as part of a wider project by the government. The reforms were intended to ensure fairness between lower and higher earners, future sustainability and affordability of the scheme. Transitional protections (also known as an ‘underpin’) were provided to members closest to retirement to provide those members with greater certainty. This was challenged by younger members of the pension schemes and in 2018, the court of appeal was held, known as ‘McCloud’. This judgement displayed that the arrangements gave rise to unlawful discrimination, principally against younger members of public sector pension schemes.

After the McCloud judgement, a 2020 consultation proposed to remove age discrimination from the LGPS, ensuring members would not receive a lower pension because of the reforms. Propositions meant LGPS members would only qualify for underpin protection if they met the criteria in a single scheme membership, as opposed to separate periods of LGPS membership that were not ‘joined up’ into a single record. However this sparked concerns about administrative burdens and adverse effects on a person's pension.

A government response to the consultation outcome was published on 6 April 2023.

The government’s consultation response says:

“A number of issues not consulted upon in 2020 have arisen, which may need to be addressed in scheme regulations.

This is a complex issue, with advantages and disadvantages to the different potential options. The government wants to ensure that it has fully considered its policy on this topic, including the practical and communications challenges, and a further consultation will allow us to obtain further information before making a final decision.”

The government now intends to seek views on plans for a second part of the remedy. The new consultation will seek further views on issues in the 2020 consultation, such as the need for LGPS members to combine records of separate periods of membership and flexible retirement, as well as new issues such as compensation and interest payments.

The final regulations are due to come into force on 1 October 2023.

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