Welcome to the latest edition of our Public Sector Pensions Update.
In this edition, we report on some developments which underline the importance of good governance and procedure and give an update on open consultations. We also tell you where you can find out about wider pensions changes and proposals which could affect your fund, and about Brexit.
If you would like to discuss any of the developments in this newsletter, please contact one of the experts listed below.
Governance | TPR engagement report
Following engagement with ten LGPS funds, the Pensions Regulator has published a series of findings and recommendations relating to governance, administration, member communications, IDRP, pension boards, employers, cyber security, fraud/scams and key person risk.
The Pensions Regulator's report is essential reading for all schemes.
Pensions Ombudsman | Ill health retirement and loss of LTA protection
You might be interested to read three recent Pensions Ombudsman decisions relating to public sector pension schemes. The first and second relate to the LGPS and contain a useful reminder of some of the key principles that apply when considering ill health retirement applications. The third relates to the Teachers' Pension Scheme and looks at the scope of an employer's responsibility where it automatically enrols a new employee into a pension scheme and the employee loses their Lifetime Allowance protection as a result.
New Fair Deal | Bulk transfer guidance for Contracting Authorities
On 22 August 2019, the Government Actuary's Department published guidance "to help Contracting Authorities to understand the steps that need to be followed when former public service staff with pension protection are re-joining an unfunded public service pension scheme". The guidance is designed to help Contracting Authorities which need to offer a bulk transfer into the NHS pension scheme or Civil Service Pension Schemes following a contract re-let or re-negotiation.
Contracting Authorities who are making a bulk transfer in other circumstances should check the guidance note and, if necessary, contact GAD to find out whether the guidance applies.
Open consultation | Independent schools and the Teachers' Pension Scheme
On 9 September 2019, the Department for Education launched a consultation on changing the rules of the Teachers’ Pension Scheme to allow independent schools to opt out on a more flexible basis: to "opt out of TPS participation for future teaching staff whilst allowing existing staff to remain as active members".
This flexibility is being considered to help "to mitigate the financial risks for some independent schools as a result of increased employer pension contributions and the department’s decision not to fund that sector for those increased costs at this stage". The consultation is open until 3 November 2019.
Open consultation | The annual allowance and the NHS pension scheme
On 11 September 2019, the Department of Health and Social Care launched a new consultation on proposals "to offer senior clinicians more control over their pensions growth". This consultation replaces the one that we discussed in our August update. It suggests a number of options that would help senior clinicians to manage their exposure to annual allowance charges and (if they wish) their build up to the lifetime allowance.
The options include allowing clinicians to choose "before the start of each scheme year a personal accrual level in 10% increments and pay correspondingly fewer employee contributions" and to "fine tune their pension growth towards the end of the scheme year by updating their chosen accrual level when they are clearer on total earnings. For example, go from 50%:50% to 60%:60%". Responses should be submitted by 1 November 2019.
The consultation paper confirms that the Treasury is going to review "how the tapered annual allowance operates in order to support the delivery of public services". The question is whether this could lead to wider reform or a root and branch review that also takes account of the private sector.
Interim guidance for employers | The NHS pension scheme
Giving senior clinicians more control over their pensions growth will require legislation, and this legislation is only expected to apply from the start of the 2020/21 tax year. In recognition of this, NHS Employers has released guidance for employers outlining "optional local measures" that they can take in the meantime "to support staff who are likely to be affected by pension tax issues".
Osborne Clarke's Q4 2019 pensions action plan
We have released our Q4 2019 pensions action plan. Each action plan is a summary of changes and proposals in pensions law and regulation over the last quarter, most of which are also relevant to public sector pension schemes.
Our action plans include a section on Brexit. In addition to this, you can find the latest editions of our Brexit Business Brief and a wealth of resources relating to Brexit on the dedicated section of our website.