What's coming up in pensions

• Further updates have been issued in respect of the McCloud unlawful age discrimination. HMRC’s latest newsletter(published 19 September) announces the relaunch of its ‘calculate your public service pension adjustment service’, with improvements having being made. The newsletter covers, among other items, reporting interest as savings income, and reclaiming unauthorised payments. Detailed guidance for members, and further guidance about the offsetting process for the unauthorised payments charge, will be available in due course.

• The Fire Brigades Union (FBU) has been refused (on 22 July) permission to appeal to the Supreme Court in relation to the Government's proposed method of paying for McCloud costs. (The FBU and British Medical Association’s judicial review of the method was earlier dismissed by the High Court in 2023, and again by the Court of Appeal in April 2024).

• DLHC published statutory guidance in June for LGPS administering authorities in England and Wales on implementation of the McCloud remedy. The guidance sets out the government’s views on how the remedy should be approached in key areas, and gives an overview of the framework and conditions for McCloud compensation and examples of where compensation may be payable.

• A new version of the McCloud transfer calculator has been published, correcting minor errors. GAD has also produced a calculator (plus guidance) to help work out interest due on retrospective payments made because of the remedy.

• MHCLG has, in consultation with GAD, issued new flexible retirement guidance under the LGPS Regulations for pension administrators in the LGPS. This guidance replaces the April 2016 version. It includes information on how the McCloud remedy affects flexible retirement calculations and confirms the death grant calculation for a member who dies after flexible retirement.

• The new Labour government is undertaking a review of UK pensions. Among other things, the review will include a focus on the LGPS, investigating how its investment power might be an 'engine for UK growth'. A Call for Evidence, inviting interested parties including LGPS stakeholders to respond on the first phase of the Review, closes on 25 September.

• The LGPS Scheme Advisory Board (SAB) published a statement on 17 September for LGPS funds and stakeholders addressing increased queries to and lobbying of administering authorities about how LGPS funds are invested. It addresses what kinds of ESG considerations are appropriate, and what level of flexibility decision makers have to respond to lobbying. SAB is seeking an opinion from Counsel as to whether there is a need to update previous advice on the nature of fiduciary duty for administering authorities. The statement notes that it is ‘important that those charged with management of an LGPS fund understand the decision-making function they have and maintain an appropriate level of knowledge and skills, as underpinned by legislation, legal opinions and guidance to exercise their duties’.

• The SAB and Institute of Chartered Accountants in England and Wales (ICAEW) has published a practical guidance ‘informer’ document to explain the timeline and information flow for the LGPS’ triennial valuation. The primary audience is expected to be scheme employers and their auditors, but pension fund officers and actuaries may also find the document useful. 

• The SAB has published its eleventh LGPS Scheme Annual Report. This provides information about the status of the LGPS for its members, employers, and other stakeholders, aggregating information from the 86 fund annual reports.

• The Local Authority Pension Fund Forum (LAPFF) has published its recommendations for UK climate policy ‘outlining how UK government can ensure policies support investment in climate action while boosting competitiveness and long-term growth’.

• The LGPS’ annual benefit statement (ABS) technical guide has been updated. The latest version reflects ABS requirements from 2025 onwards, taking into account McCloud and pensions dashboards.

The rate of tax on surplus payments to employers will remain at 25% immediately (although the government will continue to consider the wider tax regime for surplus extraction).

GAD’s guidance on staff transfers has been updated with new actuarial assumptions to be used for broad comparability assessments from 1 June 2024, for staff transferring between public service pension schemes under Fair Deal 2013 or 2004. The guidance includes short-term assumptions to be used where benefit accrual subject to the McCloud remedy is being valued.

• Further GAD valuations have been finalised for a number of schemes, including the Civil Service, Teachers, Police and LGPS. These determine employer contribution rates from April 2024 onwards. This was the first scheme valuation undertaken since revisions were made to the cost control mechanism. The methodology by which this is undertaken was revised in 2023; the process was also revised to include consideration of the wider economic situation through a new ‘economic check’. The LGPS scheme advisory board has confirmed that it is not minded to recommend any changes to scheme benefits.

• The Economic Activity of Public Bodies (Overseas Matters) Bill, which contained provisions ‘to prevent public bodies from being influenced by political or moral disapproval of foreign states when taking certain economic decisions’ had reached Committee Stage, but ended there with the dissolution of Parliament. An LGA Technical briefing had been published.

• The National Health Service Pension Schemes (Amendment) Regulations 2024 came into force on 1 April. The regulations make changes to member contributions and implement a new employer contribution rate in line with the 2020 actuarial valuation. They also make amendments to make extended working or return to work more appealing. Changes connected to the Carer’s Leave Act 2023 and to the abolition of the LTA to ensure scheme rules continue to operate as intended and accommodate new requirements are also covered.

• The Armed Forces Pensions (Amendment) Regulations 2024 came into force on 6 May. These seek to remedy revaluation discrepancies in the Armed Forces Pension Scheme 2015.

• The Firefighters’ Pension Scheme (England) (Amendment) Regulations 2024 came into force on 27 March and amend the Firefighters’ Pension Scheme (England) Regulations 2014 to make provision for unpaid carer’s leave to be included in calculating pensionable service, and to remedy an error in the Treasury Revaluation Orders for 2021 and 2022.

• The Carer's Leave (Consequential Amendments to Subordinate Legislation) Regulations 2024 also tweak the Teachers’ Pension Scheme in respect of Carer’s Leave changes.

• The MoJ has consulted on proposals to amend various judicial office pension regulations, ‘to facilitate the efficient functioning of the Judicial Pension Scheme’. Among other things, these amendments provide for an employer cost cap in JPS22 following the completion of the first scheme valuation in February 2024, and cover a number of technical amendments. The consultation closed on 14 April.

The Police Pensions (Employer Contributions) (Amendment) Regulations 2024 come into force on 1 October 2024. The Regulations will allow the rates in the formal actuarial valuations, which found that the employer contribution rate should be increased, to apply without further need for legislation, plus allow the employer contribution for pensions payable in respect of police officers in England and Wales to be determined by the Secretary of State on advice from the scheme actuary.

• TPR’s new ‘General code’ is expected imminently. Speak to us about the steps you need to take and how we can help.
• Pensions Dashboards: be prepared. While the DWP has announced a ‘reset’ of the Dashboards timeline (and so a staging date of 30 September 2024 for all public service pension schemes is no longer confirmed), schemes should still continue to prepare for connection. The PDP has produced FAQs on the revised timeline, TPR's guidance (including its ‘preparing to connect’ checklist) has been updated, and PASA has issued new advice including on ‘what to say to savers’. A ‘connection guide’ for the LGPS is remains awaited.
• Transfers: The Pension Scams Industry Group’s new interim practitioner guide helps schemes apply 2021 regulations on protecting members from scams. PSIG’s code itself will be updated once the regulations have been, following the DWP’s imminent review. Make sure you are aware of our recommended actions in light of the new publication.