The McCloud remedy – an update

What is the McCloud case?

The case concerns the transitional protections given to scheme members, who in 2012 were within 10 years of their normal retirement age, in 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. The McCloud remedy seeks to remove this age discrimination.

What does this mean for SCPF and our employers?

To implement the remedy, we need to hold the correct data. This means we need up to date and accurate working hours and service breaks for all members. You should have been providing this data since April 2014. Hours changes should be provided for your employees through i-Connect and you should have told us about any service breaks, by sending us the correct employer form found on our website. The end of year compliance return asks you to confirm you have sent us this data.

If you know your organisation hasn’t provided the full working hours and details of service breaks for all your members since 1 April 2014, we will need to collect this data in the future. Please don't destroy any relevant data. If you've changed your payroll provider since 1 April 2014, you must make sure you still have access to this information.

Current position

We updated you about McCloud at our 2021 employers meeting and since then we have continued to review our member data to check for service break gaps and accuracy of hours history. We have also been working with our software supplier, to ensure the changes that will need to be made to the pension administration system can be implemented in good time.

The Government is still considering exactly what changes need to be made to remove the age discrimination from the Local Government Pension Scheme including bringing in new legislation. In January 2021, the Government brought further amendments to the Public Service Pensions and Judicial Offices Bill. The main purpose of the Act is to give the relevant government departments the regulation powers to resolve the discrimination identified in the McCloud judgment. This bill received Royal Assent on 10 March 2022.

On 22 March 2022, the Department of Levelling Up, Housing and Communities (DLUHC) issued a letter on how funds should take the McCloud remedy into account in the 2022 triennial valuation. During the 2019 valuation, scheme employers were given the option to include the potential costs for the McCloud remedy in their employer contribution and some employers took up this option.

As the McCloud remedy position is slightly further on since the 2019 valuation, the fund’s calculation approach for member benefits for the 2022 valuation will automatically include the assumptions listed in the letter from DLUHC and will apply in the calculation of employer contribution rates by the fund’s Actuary.