Latest news on McCloud judgement
Back in February, the Scheme Advisory Board (SAB) paused the cost management process due to uncertainty surrounding an on-going court case, known as the McCloud and Sergeant case. As a reminder, the case concerns the transitional protections given to scheme members who in 2012 were within 10 years of their normal retirement age. The protections were applied to the judges and firefighters' schemes as part of public service pensions reform. Tapered protections were provided for those 3-4 years younger. On 20th December 2018, the Court of Appeal found that these protections were unlawful on the grounds of age discrimination and could not be justified.
At the end of June, the Supreme Court denied the Government’s request for an appeal and the case will now be returned to an employment tribunal for a detailed decision. Visit our news page to read about SAB's guidance in respect of the cost cap process.
More recently, on the 15th July, the Chief Secretary to the Treasury announced in a written statement that the remedies relating to the McCloud judgement will need to be made in relation to all public service pension schemes. The full statement can be found on the parliament website and a Q&A on the SAB website.
Until we receive more information, we cannot speculate on any potential implications for members and employers in the LGPS. Therefore, any retirement projections, annual benefit statements, and pensions information, will be based on the regulations as they currently stand.
In regards to the 2019 actuarial valuations, we'll need to consider with our actuary how to allow for the potential additional liabilities and costs within the funding plans. A recent update from our actuary stated:
It is unclear at this point how (or if) this will affect the LGPS but it would seem prudent to assume that there will need to be some changes to the LGPS to accommodate the McCloud ruling. In practice, even if the conclusion is that the McCloud judgement does impact on the LGPS there is still a significant amount of detail to be resolved in terms of what the exact impact will be on members’ benefits as it does not necessarily follow that the existing protections would automatically be extended to all members affected by the reforms in 2014. In practice, the immediate impacts of the judgement being confirmed do not change the position of most Funds and employers.
We will keep you up-to-date on any future developments.
This is likely to be discussed in our next employers meeting taking place on 15th November 2019. If you haven't already, please book a place by emailing email@example.com.