UK Public Service Pensions Update | May 2024

This month, we consider developments ranging from updated HMRC guidance on the McCloud remedy through to some recent Pensions Ombudsman decisions. 

If you would like to discuss any of the items in this newsletter, please contact one of the experts listed at the end.

Valuations | 2020 valuation results

In our last newsletter, we reported that the Government Actuary's Department (GAD) had started to publish the results of the 2020 actuarial valuations of the public service pension schemes. GAD has now shared the results for the Civil Service Pension Scheme.

The McCloud remedy | Updated HMRC guidance

HMRC's pension schemes newsletter 159 explains that its "calculate your public service pension adjustment service" tool is currently unavailable and says what members who need to make a submission to HMRC should do. It also explains that the public service pensions remedy tax treatment of interest guidance in pension schemes newsletter 156 has been updated "to reflect that where interest is paid as required by the Employment Tribunal or HM Treasury directions in respect of late payment of a benefit that is an authorised payment, the interest will also be an authorised payment."

Removal of the lifetime allowance | Further guidance

HMRC continues to update its pensions tax manual. It has also published further guidance in the form of pension schemes newsletter 159 and a partially updated, consolidated, frequently asked questions document in which 105 questions and answers are grouped by subject area.

The second set of supplementary and amending regulations (needed, among other things, to address issues affecting members with protections and the issues highlighted in newsletter 159) is still expected soon.

Funds should continue to discuss the removal of the lifetime allowance with their scheme administrators, and seek updates on the actions needed.

The Pensions Regulator | Corporate Plan 2024-27

The Pensions Regulator has published its Corporate Plan for the years 2024 to 2027. Public service schemes should note the emphasis on good governance (including taking the action required by the Pensions Regulator's new General Code), and good data, good administration and pensions dashboard readiness.

Pensions dashboards | Dashboard readiness

In our last newsletter, we reported that the Department for Work and Pensions (DWP) had published its long-awaited guidance setting out the staged timetable for connecting to the pensions dashboards ecosystem and that the "connect by" date for public service pension schemes has been confirmed as 31 October 2025. Since then, the Pensions Dashboards Programme has released an updated version of the data standards and an update on the work it is doing, and the Pensions Administration Standards Association has published an update on the tools and guidance that it is working on.

Funds should ask the advisers who are helping them to prepare for pensions dashboard connection to help them to prepare a project plan to ensure their scheme will be ready to connect.

Pension Scams Industry Group | Consultation on the future of the group and its code

The Pension Scams Industry Group (PSIG) has launched a consultation asking for feedback on the value of its Code of Best Practice on Combatting Pension Scams and all the other work it does in this area, and on options for funding to allow it to continue its work. The related press release explains that PSIG is reliant on volunteers and is unsustainable in its current form.

As the consultation document explains, the Code of Practice "is used extensively throughout the industry [and] increasingly recognised as defining good practice, being quoted in Pension Ombudsman decisions and referred to in the new TPR General Code of Practice." PSIG is also key to the Pension Scams Industry Forum and Pension Scams Action Group. Funds may wish to respond to (or ask their scheme administrators if they intend to respond to) this consultation which will be open until 31 July 2024.

Environmental, social and governance | Knowledge update

Funds might be interested to read our ESG knowledge update for May 2024 and use the link next to the update to sign up for future editions.

Pensions Ombudsman | Recent decisions

The Pensions Ombudsman has partially upheld a complaint by the children of a deceased member of the Local Government Pension Scheme in relation to a decision to pay all of the lump sum death grant to the member's second wife. (CAS-75613-N2J8 and CAS-75612-J0N8)

Why should I read the decision? It confirms the importance of following a discretions policy and considering all relevant matters when deciding to whom to pay a lump-sum death grant. The original decision only took account of the member's expression of wish.

The discretions policy said that "[d]ecisions on the payment of a death grant will be made after taking into account all relevant considerations and documentary evidence, including the deceased’s expression of wish and will". Shortly before his death, the member had completed an expression of wish naming his second (and then current) wife. The decision-maker followed the expression of wish. It subsequently reviewed its decision and, having taken account of the expression of wish, the member's will and other factors, reached the same decision (to pay all of the death grant to the member's second wife). That decision could stand because the decision-maker had followed the correct process and the decision was in the reasonable range. However, the ombudsman made increased awards for distress and inconvenience (£1,000 to each of the two children) in view of the procedural errors before the decision was reviewed, and the time that passed before the decision was reviewed. 

The Pensions Ombudsman has partially upheld two complaints made by members of the Teachers' Pension Scheme in relation to the recovery of overpaid benefits (CAS-26661-R4X7 and CAS-44368-C3K1). 

Why should I read the decisions? They consider HM Treasury's "Managing Public Money" guidelines, the defences to recovery of past overpayments, the fact that equitable set-off applies in statutory schemes (not recoupment, which is relevant to trust-based schemes), and the need to obtain an order of a competent court (the County Court) before using set-off to recover past overpayments from future benefit payments in the event that recovery is disputed.

House of Commons Library briefing papers | New and updated

The House of Commons Library has published or updated the following briefing papers, which might be of interest to public service pension schemes and employers.

• Armed Forces Compensation Scheme: Quinquennial review 2023
• The Armed Forces Compensation Scheme
• Artificial intelligence: a reading list

This newsletter covers developments relating to public service pensions in England and Wales, with a focus on the Local Government Pension Scheme.