LGPS Current Issues | March 2025
Regulatory round up
McCloud remedy - various
Work continues both centrally and locally to move the McCloud remedy forwards.
Transfers – Club and Non-club
A calculator has been provided (alongside guidance in relation to club transfer information) to support administering authorities undertake basic club transfer calculations that allow for the remedy. Manual calculations may still be required for complex cases.
MHCLG has also published updated guidance on how to reflect late retirement increases when calculating the McCloud element of a non-Club transfer value.
Recalculating pension debits
Given Regulation 12 of the LGPS (Amendment) (No 3) Regulations 2023 (England and Wales) and the LGPS (Remediable Service) (Scotland) Regulations 2023, does not require administering authorities to recalculate pension debits, consideration is to be given to delaying certain calculations given that it’s possible the Government may amend the regulations in this area in the next few months. Where cases can’t be delayed, beneficiaries should be informed about possible future benefit reductions and overpayment recoveries.
Webinars
A series of webinars developed by the LGPC team and the Communications Working Group (alongside Affinity Connect) will begin in March 2025 aimed at active and deferred members who are protected by the McCloud remedy. Further details can be found here (England and Wales) and here (Scotland).
Scottish Regulations
The Scottish Government laid the LGPS (Remediable Service) (Scotland) (Miscellaneous Amendment) Regulations 2024 (the ‘Amendment Regulations’) in December 2024, which became effective from 6 February 2025 and amend the underpin rules. In summary, the main changes, alongside minor technical amendments, were:
- Early retirements - Amendments to reflect the intention that actuarial reductions may apply to provisional underpin amounts where members are drawing CARE pension on voluntary or flexible retirement prior to 65 and where pre-2015 benefits aren’t necessarily reduced.
- Annual Benefit Statements – As for England and Wales figures for 2023/24 ABS should have been calculated ignoring the new underpin rules and from 2024/25 onwards they must be calculated using the new underpin (with certain discretionary powers and notification requirements applying). The new ABS rules also apply to Pension credit members.
- Pensioner member death grant recalculations – now aligned with the rules for recalculating deferred member death grants.
- Special interest – These have now been aligned with those in England and Wales as per the original intention alongside amendments to the rules around special interest for club transfers.
On 21 February 2025, the LGPS (Scotland) (Amendment) Regulations 2025 were laid, coming into force on 2 April and backdated to 1 June 2018. The regulations focus primarily on exit credits, and minor technical amendments to the LGPS (Scotland) (Amendment) Regulations 2024. SPPA have also confirmed that Funds should follow the recently updated Funding Strategy Statement guidance issued in England and Wales in relation to outlining their approach to exit credits.
Further Education Colleges – New Fair Deal
Following the reclassification of FE colleges as public bodies in November 2022, HMT have now confirmed, in a letter to the Association of Colleges, that New Fair Deal Guidance now applies to FE colleges operating in the statutory sector in England effective from 14 November.
As for other employers subject to the guidance (central government departments, agencies, other parts of the public sector under the control of central government e.g. academies), when a college now undertakes an outsourcing, the new employer must continue to provide (eligible) transferred employees with continued access to the LGPS.
As per the Fairness section below, New Fair Deal is to be subject of a further consultation in the coming months.
Consultation: Local audit reform
The publication of the Government’s English Devolution White Paper that was released in December 2024 also initiated an open consultation titled "Local Audit Reform: A Strategy for Overhauling the Local Audit System in England," which closed on 29 January 2025 and aimed to enhance the local audit system.
Notably, the consultation included (paragraph 77) a proposal suggesting the separation of the pension fund accounts from the main accounts of the administering authority, a change long recommended by the Board and mirroring the approach followed elsewhere in the UK.
SAB had previously reaffirmed its position on this subject to the Local Government Minister Jim McMahon MP in a letter from November 2024 and therefore welcomed the proposals in the latest consultation. The Board’s response to the consultation can be found here.
Fairness
MHCLG have confirmed that, given the Deputy Prime Minister’s commitment to improving workers' rights, especially for women and those on low pay, MHCLG will be looking to improve fairness and access to the LGPS through 4 reform projects.
New Fair Deal – revisiting the previous 2019 consultation to improve pension protections for outsourced workers.
Survivor Benefits – equalising benefits for survivors of all relation e.g. the Goodwin case
Gender Pensions Gap – looking at ways to close the Gender Pensions Gap (please refer our briefing note for more information on this).
Opt-outs – understanding who is opting out of the scheme and why.
A consultation on these projects is expected to be published in the coming months. Depending on the outcomes, there will be practical implications for Funds to consider, in particular with regard to implementing any New Fair Deal policies and potential rectification of historic survivor benefits so Funds will need to ensure their business plans reflect this accordingly when more details are known.
Other regulatory news in brief
The Neonatal Care Leave and Pay (Consequential Amendments to Subordinate Legislation) Regulations 2025
The Department for Business and Trade laid the above regulations on 24 February 2025, coming into effect on 6 April 2025. They make changes to related to neonatal care leave (NCL) and pay essentially treating is similarly to other types of child-related leave. As a result, certain LGPS regulations and the definition of “child related leave” in schedule 1 of the LGPS (England and Wales) Regulations 2013 will be updated in due course.
Change to the Normal Minimum Pension Age in 2028
With the NMPA due to increase to 57 from 6 April 2028, questions remain about whether LGPS members who qualify for a Protected Penson Age (PPA) will be permitted to take their benefits prior to age 57 after 6 April 2028.
Clarification is being sought from MHCLG (and SPPA) as to how PPAs will be applied in the LGPS given the implications this will have for members who transfer in / out and also who are seeking benefit estimates via online portals. Funds are advised to ensure communications and processes are updated accordingly until further clarity is known.