What's coming up in pensions: public sector focus

The Department for Levelling Up, Housing and Communities (DLUHC) has commenced a new consultation on the ‘Governance and reporting of climate change risks’ for the LGPS. The proposals aim to ensure that climate change risks and opportunities are incorporated in an administering authority’s decision making process, and that they report on these annually, in line with the recommendations of the Taskforce on Climate-related Financial Disclosures.

The requirements are generally in line with those applying to large and authorised private sector schemes under the Pension Schemes Act 2021, with a key difference being their proposed application regardless of fund size.

The consultation is open until 24 November 2022, with the regulations due to come into in force by April 2023 (and the first reports required by December 2024).

In our April briefing we set out how the Public Service Pensions and Judicial Offices Act would start to remedy McCloud unlawful age discrimination.

The DLUHC has recently confirmed that its response to the consultation (on amendments to the statutory underpin for the LGPS alongside draft regulations) has been delayed, now being expected in early 2023 rather than this Autumn. Further consultations on additional aspects (such as compensation and rates of interest), and on new statutory guidance on McCloud implementation, will also take place next year.

In the meantime, the Pensions Ombudsman has published a factsheet on its approach to McCloud and Sargeant complaints. See our Ombudsman Update for this and other publications.

The Government has published a long-awaited response to its 2019 consultation on changes to the “Fair Deal”, which protects employees who are outsourced from their LGPS employer.

The response, published following the change in Prime Minister, confirms the DLUHC is reconsidering its approach to Fair Deal and that a new consultation (taking account of representations already made) will follow. No timescale has been given.

An August consultation on Public Sector Exit Payments and Severance Payment guidance (in respect of Central Government) remains open for comment until 17 October 2022.

In contrast, the Government has confirmed that a further consultation on the reform of local government exit pay is required (following the 2020 consultation). As with Fair Deal, no timescale has been given.

The Government Actuary's Department has announced that broad comparability assessments, which primarily look to protect future pension rights on staff compulsorily transferred within the public sector, will resume in full this autumn.

Work on most assessments was paused in 2020 in response to the McCloud judgment (see above). They were partially restarted earlier this year following the resolution of some technical uncertainties.

We understand that DLUHC can be expected to consult on Good Governance requirements for the LGPS this year.

This marks the culmination of the project which commenced in April 2019 to improve standards of governance and administration in the LGPS, and to ensure they better match those expected by the Pensions Regulator.

In response to Covid-19, legislation was created to allow NHS staff to return to (or increase their) work without negative effect on their pensions. A consultation had already proposed to extend the easement until 31 March 2023.

In the ‘Fiscal Event’ of 23 September, Health Secretary Thérèse Coffey announced various further changes to NHS pension rules, with the aim of increasing capacity by retaining staff. These include “correcting” the pensions rules around inflation, looking at “pension recycling”, implementing permanent retirement flexibilities, and further extending the temporary measures to incentivise staff to return to service or remain in service for longer (see above).

Update: regulations made on 10 October now extend the above easement until 31 March 2025. The response to consultation states that the Government will keep the impact of the NHS Pension Scheme on the NHS workforce's needs under review; it also confirms that a further consultation on a "package of new retirement flexibilities" can be expected during the autumn.

A new team of counter fraud and data experts has been assembled to tackle fraud against the public purse, with an initial target of preventing £180 million of fraud in its first twelve months.

The team will:

• agree counter fraud plans for public bodies and departments, and review their progress;
• provide expert support on relevant risks and threats, and help design defences, including testing their effectiveness;
• brief Cabinet Ministers on the latest fraud landscape;
• build a National Counter Fraud Data Analytics Service to provide advanced data capabilities to fight and prevent fraud against taxpayers; and
• enhance the use of fraud intelligence across the public and other sectors.

The current National Fraud Initiative is said to have prevented more than £200m of public sector pension fraud between 2020 and 2022.

• The Pension Regulator’s Single Code remains awaited – how you can be taking action now.
• Pension Dashboards: start to review and prepare your data ahead of your staging date. See our recent Key issues for pension trustees’ agenda for this and other issues schemes should currently be considering, including the cost-of-living crisis.