LGPS Current Issues | September 2024
Regulatory round up
McCloud remedy - various
Work continues both centrally and locally to move the McCloud remedy forwards.
Annual Benefit Statement
DLUHC (now MHCLG) issued a short, limited consultation to relevant stakeholders on 4 June 2024 in relation to the information administering authorities would need to include on Annual Benefit Statements (ABS) in 2023/24 and 2024/25. In short, the consultation:
- Contained draft regulations that would mean administering authorities would not need to include underpin information in the 2023/24 ABSs’ in line with the original government response to the 2020 consultation. Inclusion would be on a discretionary basis only.
- Sought views on whether the above change would extend to the 2024/25 ABSs’ too but on a discretionary basis only where there would only be certain scenarios set out in guidance under which the underpin would not be included for certain members until 2025/26.
On 28 August 2024, in response to the consultation, MHCLG laid the LGPS (Information) Regulations 2024. These come into force on 23 September 2024 (backdated to 1 October 2023). The Regulations therefore remove the requirement to include estimated underpin information on 2023/24 annual benefit statements and also provide a discretion to not include information on 2024/25 statements for particular groups of members.
Further guidance from MHCLG on how this discretion will work in practice is now being considered. Whilst the Regulations have been laid in England and Wales (thereby removing the need for administering authorities to report breaches of law to TPR for not quoting underpin information in 2023/24), this is not the case in Scotland and breach reports therefore need to be made where necessary.
Guidance
The final guidance on the McCloud implementation was issued by DLUHC (now MHCLG) on 17 June 2024 and sets out the Government’s view on certain cases where a consistent approach across all schemes should be adopted, together with additional guidance on how certain to address certain technical issues. Similar guidance has been issued by SPPA.
In addition, a number of updated guidance materials have been produced in both England, Wales, and Scotland to help administering authorities implement the remedy in relation to CETVs, pension debits, interest, trivial commutation and flexible retirement. Further details can be found here.
Teachers Excess Pensions
Discussions continue between LGA and representatives from MHCLG, DFE and Capita to discuss the operation of the McCloud remedy for teachers with excess services. At present, employers should be looking to validate the excess service data that TPS has supplied. Once validated, data can be provided to administering authorities. Further guidance and support on the steps administering authorities need to follow to implement this area of the remedy will be issued in due course once agreed. The TPS also issued an updated timeline for excess service in August 2024
SAB Cost Management
The Government Actuary Department has now published its report into its assessment of the SAB Cost Management process as at 31 March 2020 using assumptions set by SAB (which differ to those underlying the HMT cost management assessment).
Whilst scheme costs were assessed to be 20.5% and thus above the 19.5% target cost, this was within the range where the SAB could make recommendations to change benefits to bring the cost closer to the target cost but is not obliged to do so.
MHCLG have now been informed in a letter from the SAB chair that no changes are to be recommended, in line with the conclusion from the HMT process that concluded earlier this year.
Other regulatory news in brief
SAB Good Governance Project
The General Election has meant a further delay for the Good Governance recommendations to be formally implemented (whether via regulatory change or statutory guidance) and further consultation is still awaited. However, the SAB have asked this be treated as a priority matter by the new Minister. The timing remains uncertain, in light of the Pensions Review that has since been announced, although it is hoped the two can run in tandem.
The King’s Speech – Host Authority separation
Within the Pensions Bill unveiled in the King’s Speech on 17 July 2024 a Bill on Audit Reform and Corporate Governance was referenced. This could be a potential vehicle for the separation of pension fund from host authority audit in England, bringing it into line with the approach followed in Scotland and Wales. SAB have called for this in the past and have received assurance that the recommendation would be taken forward once a vehicle became available.