Exit cap payment

Publication date: 01/07/2021 11:50:30

On 12 February 2021, HM Treasury [HMT] published the Exit Payment Cap Directions 2021 which disapply regulations 3, 9 and 12 of the Restriction of Public Sector Exit Payment Regulations 2020 with immediate effect. This means the exit cap does not apply to exits that take place on or after 12 February 2021.

The Government confirmed in the Guidance that “HM Treasury will bring forward proposals at pace to tackle unjustified exit payments”.

We understand that MHCLG still plans to introduce further changes to exit payments following the recent MHCLG consultation on reforming local government exit pay. MHCLG has confirmed that it will consult again on further reforms to exit payments before any changes are made and we will inform you, our employers, when a consultation takes place.

Although the Government has not confirmed when the exit cap or further reforms will be looked at, we are aware that Public Sector employers planning future workforce reform will need to be aware that:

  • an exit cap may be in force later in 2021, and
  • MHCLG may introduce further reforms to exit pay when the exit cap is re-introduced.

If you request a quote at this time, the figures you receive will not take into account any future changes to the LGPS regulations or wider exit payment cap or reform. If a retirement takes place after the introduction of new regulations, then a new quotation (based on the benefit structure and member options) will be required. As noted above, we do not currently know when the exit cap or further reforms may be reintroduced or when the LGPS Regulations will be amended.