In a flurry of action on 16 July, various consultations were issued by Government proposing solutions to providing remedy across many of the public service pension schemes following the McCloud/Sargeant cases.
These cases found that the transitional arrangements made at the time of pension reform in the Judges and Fire Schemes were age discriminatory. Following the judgement the Government undertook to address the issue across all the public service pension schemes.
The reforms in the LGPS were unlike the arrangements made in the other schemes by firstly retaining all members in the same scheme and secondly delivering transitional protection by way of an underpin to those who were within 10 years of retirement on 31 March 2012.
"Putting the remedy into effect will add significant complications to the administration of the Scheme"
The proposals now being consulted on, amend the original underpin arrangement for those previously protected and in addition will apply to all who were active in the Scheme on 1 April 2012. It will provide protection on membership to April 2022.
Applying the remedy will add significant cost and administration difficulties across the public service pension schemes.
Graeme Muir, Partner and Head of Public Sector at Barnett Waddingham, said; “Although provision was made in the 2019 LGPS Fund Valuations for remedy, we expect it would only be in exceptional circumstances that employer contributions would be revised in advance of the 2022 funding valuations.
“We note that at the same time as releasing the remedy consultations, the Government has also announced the unpausing of the 2016 cost cap process and that the review of the operation of the cost cap will complete prior to the 2020 process and so the overall cost of the Scheme will also be reviewed in light of remedy.”
Annemarie van Bochove Allen, Principal and Head of Benefits and Governance at Barnett Waddingham, said; “Putting the remedy into effect will add significant complications to the administration of the Scheme and require additional resource to be applied. Obtaining the historic data required to operate the remedy from a myriad of employers will be a challenge.”
The LGPS (England and Wales) consultation closes on 8 October 2020.
Barnett Waddingham is reviewing the proposals in detail and will issue further comment, before submitting its response.