On the go: The Association of Consulting Actuaries has warned that the government’s proposed solutions to the McCloud dilemma “must be implemented efficiently” for each affected scheme.
With the estimated cost of the solution to McCloud being £17bn, and with 3m public sector scheme members and more than 1m Local Government Pension Scheme members affected, proper implementation is vital if people are to “properly understand the decisions they are being asked to make”, the ACA said.
As reported by Pensions Expert, the government proposes that members are offered either an immediate choice or a deferred choice underpin as to whether they remain in their current scheme or move back to the legacy scheme as it was pre-2015.
ACA chair Bart Huby said: “What will be important, whichever approach is used — the government is consulting on two options — is that the remedy is implemented efficiently and effectively for each public service scheme.
“In particular, with around 3m members needing to make a decision on which scheme to be in, it will be vital that affected members are given sufficient information and guidance to properly understand the decisions they are being asked to make and are provided with adequate support in making those decisions.
“If this doesn’t happen, there will be a real risk that some members will make what is in retrospect a bad decision, and then subsequently claim they weren’t adequately supported by their scheme — leading potentially to further uncertainty and extra costs.”
That much of the consultation document is taken up by discussion of taxation is evidence of how complex the pensions tax regime is, added Karen Goldschmidt, chair of ACA’s pensions taxation committee.
“This illustrates again how complicated the current pensions taxation regime is and how, in an already complex world, it can add inappropriate and unnecessary levels of extra complexity to schemes delivering benefits due to members,” she said.
