McCloud: Further consultation on LGPS statutory underpin due
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The government has provided details on extending protection of final salary benefits in the Local Government Pension Scheme to younger members, responding to a consultation on amendments to the issue. A future consultation will ask if members need to have been in a single scheme to qualify for protection.
The Department for Levelling Up, Housing and Communities said it considered extending the underpin "to be the simplest and fairest way of addressing the McCloud discrimination”.
When public service schemes were reformed in 2014 by changing from final salary to career average and introducing a higher pension age, the government offered protection to older workers but not younger ones. This transitional protection was challenged by younger members of the firefighters and judicial pension schemes, and in 2018, the Court of Appeal ruled that it was unlawful. British case law means the so-called McCloud judgment applies to all public service pension schemes that had similar protections in place, including the LGPS.
DLUHC will now go ahead with its proposals and, responding to a consultation, has said how it will implement the protection extension to younger members, having already announced its intention to do so in 2021. The extension will require primary legislation.
DLUHC has now said it is “considering whether members will be required to meet the underpin qualifying criteria in a ‘single scheme membership’ – a single pensions record, including any previous service aggregated or transferred for the purpose of calculating benefits” and plans to consult again on this.
DLUHC has now said it is “considering whether members will be required to meet the underpin qualifying criteria in a ‘single scheme membership’ – a single pensions record, including any previous service aggregated or transferred for the purpose of calculating benefits” and plans to consult again on this.
The protection means that for a given period, the scheme will need to calculate both the final salary and the career average entitlement, automatically providing the better of the two. The underpin period will run from 1 April 2014 to 31 March 2022, or to a member’s final salary normal pension age, usually 65, if that is earlier than 31 March 2022.
"To ensure the underpin applies fairly between different types of member, the government is expanding the qualifying criteria to members who had career breaks,” DLUHC added.
What is your view on DLUHC’s proposed next consultation?
