The government goes back for more McCloud consultation in the LGPS
The Department for Levelling Up, Housing and Communities (DLUHC) published a consultation document which follows a previous consultation in 2020 on proposals to address the discrimination identified by the McCloud case and a response from April this year as to how it would manage the process.
All change!
The government reformed public service pension schemes in 2014 and 2015 and introduced transitional protections for older members at the time.
The Court of Appeal ruled in December 2018 that because the protections did not apply to younger members of the judicial and firefighters’ pension schemes, they had been unlawfully discriminated against.
The ruling is known as the McCloud judgment, after a member of the Judicial Pension Scheme.
This ruling meant all public service pension schemes that provided transitional protection wold be required to change, including the Local Government Pension Scheme (LGPS). The changes are referred to as the McCloud ‘remedy’, designed to remove the age discrimination found in the court case.
The original 2020 consultation resulted in the government deciding to address McCloud discrimination by extending the ‘underpin’ protection to the younger members of the scheme treated unlawfully according to the courts. In the LGPS, the underpin is the means through which transitional protection was provided to older members.
New bones of contention
The new consultation the DLUHC is seeking additional views on a number of areas or addressing areas not covered in the 2020 consultation.
It is also seeking views on draft scheme regulations which would implement the McCloud remedy in the LGPS.
One of these policy issues was the matter of aggregation and how to determine rules to decide whether a member with multiple LGPS memberships has underpin protection across some or all of these.
So-called club transfers are also under examination to decide whether a member with previous membership of another public service pension scheme has underpin protection in respect of their LGPS membership.
The DLUHC is also looking for insights in how the underpin can work in respect of flexible retirement; how divorce and underpin calculations should be handled; and how a retrospective increase to a member’s pension arising from McCloud remedy may impact any injury allowances payable.
Virginia Burke, senior consultant at Aon said of the consultation: “The government has given a well considered response to contentious and complex issues such as aggregation and flexible retirement.
“We welcome the fact that government is seeking further views on these areas to make sure it gets the policy right – the last thing LGPS members and administrators need are further tweaks down the line.”
