Pause to cost cap gives more time for proposed changes across public service schemes

The Government have this week issued a written statement announcing their decision to pause the cost cap process across all public service schemes. This delay is a consequence of the McCloud judgement, which could result in all public service schemes having to unravel the transitional protections built into the new schemes, post Hutton’s review. There is currently an application to appeal the McCloud case but we do not yet know what the timescales are for the outcome to be known.
"It is possible that such changes will simply be deferred . . . and potentially backdated"

Roisin McGuire, Associate and Actuary at Barnett Waddingham, shares her thoughts on the judgement and what this means for the LGPS. 

The McCloud judgement was in relation to a legal challenge by members of the New Judicial Pension Scheme (NJPS) against the age-based transitional provisions put into place when the new judicial pension arrangements were introduced in 2015. The members argued that these transitional provisions were directly discriminatory on grounds of age and indirectly discriminatory on grounds of sex and race, based on the correlation between these two factors reflected in the judicial membership. The Tribunal ruled against the Government, deeming the transitional provisions as not a proportionate means of achieving a legitimate aim.

So what does this mean for the LGPS?  It means we probably do not have to get all the proposed changes to the LGPS in place by 1 April 2019. As these changes were still to be consulted on, this would have been fairly challenging, if not impossible, in any case. However, that brings another headache. It is possible that such changes will simply be deferred . . . and potentially backdated! All this during the year in which fund actuaries are trying valiantly to complete actuarial valuations, in order to certify the employer contributions due from 1 April 2020. If we thought 2019 was going to be challenging with Brexit looming, this is yet another curve ball for fund actuaries to grapple with. However, as always, we advocate a pragmatic and proportionate response.