Public Service Pensions Update | January 2021

Written on 28 Jan 2021

In this edition, we discuss a further challenge to the cap on public service exit pay and developments in areas ranging from the Pension Schemes Bill to Brexit.

If you would like to discuss any of the developments in this newsletter, please contact one of the experts listed below.

Further legal challenge | Cap on public service exit pay

In our December 2020 newsletter, we noted that Civil Service World had reported that several public service unions have raised legal challenges in respect of the introduction of the £95,000 cap on exit payments by The Restriction of Public Sector Exit Payments Regulations 2020 and that one union, the FDA, has sought a judicial review.

On 4 January 2021, the Local Government Pension Scheme Advisory Board (SAB) confirmed that, "[o]n 22nd December 2020 three requests for Judicial Review… of the Restriction of Public Sector Exit Payment Regulations 2020 were granted permission to be heard. These requests, which will be heard together in the latter half of March, are from ALACE [Association of Local Authority Chief Executives] LLG [Lawyers in Local Government], UNISON and GMB/Unite contest the regulations on a number of grounds including their effect on the existing LGPS [Local Government Pension Scheme] regulations."

On 13 January 2021, the SAB published a further update confirming the effect of the Judicial Review proceedings on further regulations and member complaints. In particular, the update confirms that the Pensions Ombudsman has asked that "LGPS administering authorities be clear in communications with scheme members where the authority has determined to follow the recommendations in the MHCLG (Ministry of Housing Local Government and Communities) letter of 28th October and not pay an unreduced pension".

Investment | Call for evidence on a just transition to net zero

The All-Party Parliamentary Group for Local Authority Pension Funds has launched an inquiry into ‘"Responsible investment for a just transition" to a net-zero economy. Its focus is on "the UK and the contribution that local authority pension funds and other institutional investors can make towards achieving a just transition. How can the policies and practices of major investors help decarbonise the economy in a way that protects beneficiaries and secures the future and livelihoods of workers and their communities?". The group is inviting submissions to its call for evidence.

We discuss other developments in the area of environmental social and governance factors in our Q2 2021 Pensions Action Plan and will include a link to this in the next newsletter.

Pension Schemes Bill | Awaiting Royal Assent

The Pensions Schemes Bill went through the final stage of the parliamentary process on 19 January 2021 and the agreed text awaits Royal Assent.

As we have reported in previous newsletters, the Bill makes changes in areas such as scheme funding, moral hazard and statutory transfer rights. It also introduces new criminal offences, new civil penalties, pensions dashboards and collective money purchase schemes.

While the majority of the Bill's provisions apply to private sector occupational pension schemes, the ones relating to statutory transfer rights should help all occupational pension schemes, including LGPS funds and other public service pension schemes, to combat pension scams. In addition, the Bill introduces new climate change risk governance requirements, which depending on the definition of occupational pension scheme used in subsequent regulations may apply to the LGPS.

Once the Bill has received Royal Assent and become law, funds can expect to see a series of consultations on related regulations and guidance. As such, funds should continue to follow developments in the areas that affect them.

Administration | Pensions increase multiplier tables

HM Treasury has published the 2021 pensions increase multiplier tables to help scheme administrators apply the correct annual increase to public service pensions. The accompanying policy paper confirms that the Pensions Increase (Review) Order should be laid during March 2021.

Administration | New regulations

The Firefighters' Pension Schemes and Compensation Scheme (Wales) (Amendment) Regulations 2020 have been laid and will come into force on 23 February 2021.

The Public Service Pensions Act 2013 (Judicial Offices) (Amendment etc.) Regulations 2021 have been laid and will come into force on 1 April 2021.

Brexit | Data protection and other actions

On 24 December 2020, the EU and the UK agreed the EU-UK Trade and Cooperation Agreement (TCA).

In our December 2020 newsletter, we started to look at the impact on data protection of the UK reaching the end of the transition period.  Our specialist data protection team has now written this update, which takes account of the TCA. Funds might like to read this and take advice as needed.

Funds should also revisit their Brexit contingency plans in the light of the TCA and revisit the Pensions Regulator's guidance on planning, much of which is still relevant.

The Pensions Ombudsman | Various

The Pensions Ombudsman has:

  • Upheld a complaint by a member of the LGPS that, because it did not properly consider her appeal, her employer did not comply with a term in a COT3 agreement under which it agreed an extension of the period for her to appeal against a decision not to award her ill-health retirement when her employment was terminated.
  • Not upheld a complaint by a member of the LGPS that her employer should have awarded her an ill-health retirement pension from active status;
  • Partly upheld a complaint by a member of the NHS Pension Scheme about information provided to her as to the level of benefit that would be payable if she retired;
  • Partly upheld a complaint by two sons about the information provided to them by Teachers' Pensions about the benefits payable following their mother's death;
  • Partly upheld a complaint by a member of the Teachers' Pension Scheme that Teachers’ Pensions unreasonably delayed the calculation of his final retirement benefits; and
  • Upheld a complaint by a retained firefighter that he returned the necessary forms in order to begin the process of enrolling in the Modified Scheme, but the relevant authority has not allowed him to do so.

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: