Public Service Pensions Update: October 2025

This month we look at three developments relevant to the Local Government Pension Scheme (LGPS). We also look at four developments relevant to all public service pension schemes and three 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 of the update.

Focus on the LGPS

New consultation | Scheme improvements (access and protections), including New Fair Deal

The government has launched a new consultation: Local Government Pension Scheme in England and Wales – Scheme Improvements (Access and Protections).

The consultation paper says that it follows on from the "access and fairness" consultation launched by the government in May and relates to the following:

• "New Fair Deal" – proposals to implement "Fair Deal" protections in the LGPS, aligning across government in ensuring continued access to the LGPS for outsourced workers.

• Proposals to amend the normal minimum pension age to age 57, following the Finance Act 2022, and to ensure that members with a protected pension age can still take pension benefits at that age except for members that have transferred benefits into the LGPS.

• Proposals to extend access to the scheme for councillors and mayors in England.

• Academies and applications for directions – proposals to put criteria for applications for directions into legislation, and to remove secretary of states consent where all criteria are met".

Draft regulations for two of the proposals (New Fair Deal and LGPS access for mayors and councillors) have been published for comment alongside the consultation.

Draft regulations for the other two proposals (Normal Minimum Pension Age and applications for academy directions) will be published for consultation "later in the year", once the government has considered the feedback from this consultation.

The consultation closes on 22 December 2025.

New Fair Deal proposals

New Fair Deal was introduced as HM Treasury guidance with effect from 1 October 2013.

This is the third consultation with the aim of incorporating New Fair Deal protection in the LGPS following previous consultations in 2016 and 2019.

New Fair Deal applies to outsourcings and staff transfers to contractors from central government departments and agencies, the NHS, and academies. It protects the pension rights of transferred staff so that post transfer in their employment with contractors staff continue to remain entitled to membership of the public service pension scheme that was available to them in their employment before the staff transfer.

Under New Fair Deal, the option for the contractor to provide an occupational pension scheme that is certified by the Government Actuary's Department as providing benefits which are broadly comparable to the relevant public service pension scheme (a "broadly comparable scheme") is available only in exceptional circumstances.

Currently, the pension rights of employees of "best value authorities" (for example, local authorities) in England are protected by the Best Value Authorities Staff Transfers (Pensions) Direction 2007, and the pension rights of local authority employees in Wales by the Welsh Authorities Staff Transfers (Pensions) Directions 2022 (together the Pensions Directions). The Pensions Directions provide contractors with the option of continued participation in the LGPS, or the option of providing a broadly comparable scheme.

The consultation proposals aim to revoke the Pensions Directions and replace them with new directions removing the broadly comparable scheme option in all but exceptional circumstances, thus bringing the LGPS into line with New Fair Deal and the position that applies to other public service pension schemes. The proposals also aim to preserve the value of final salary pensions transferred from broadly comparable schemes into the LGPS. Any future pension accrual within the LGPS would still be on a CARE basis.

This latest consultation revisits the idea of removing admitted body status for outsourcing contractors participating in the LGPS that was considered in the 2019 consultation.

The contract awarding authority LGPS Scheme employer will be a "deemed employer", a concept which already applies in the LGPS, for example where local authorities are the deemed employers of employees of voluntary schools.

While the aim of this appears to be to reduce the number of employers participating the LGPS, according to the consultation paper, responsibility for the pension rights of transferred staff and employer pension contributions will nevertheless be shared between the contractor and the contract-awarding authority LGPS Scheme employer.

The proposed removal of admitted body status for outsourcing contractors participating in the LGPS presumably removes the requirement for an admission agreement. This perhaps differs from New Fair Deal which requires independent contractors to enter into a participation agreement with the administering body of the relevant public service pension scheme (unless the relevant pension scheme regulations make alternative provision).   

Finally, the proposals aim to make it easier for the contract awarding authority LGPS Scheme employer and the contractor to agree employer contribution funding risk sharing arrangements with "a clearly defined pass-through arrangement".

Academies proposals

The "academies proposals" relate to circumstances where LGPS employers apply for directions from the secretary of state to move from one LGPS fund to another by substituting their existing LGPS administering authority with another administering authority. Typically, this process is used where an employer participates in more than one LGPS fund and wishes to consolidate its LGPS membership in one LGPS fund for administrative ease and efficiency. The consultation proposes that the LGPS regulations should be updated to include the criteria needed in order for an academy to make an application. Where the criteria are clearly met the government also proposes removing the requirement to seek secretary of state approval. 

Consultation response | 2026/27 code of practice on local authority accounting in the UK

The LGPS Scheme Advisory Board has shared its response to the Chartered Institute of Public Finance and Accountancy's and the local authority Scotland accounts advisory committee's consultation on the 2026/27 code of practice on local authority accounting in the UK. The new code will apply to accounting periods starting on or after 1 April 2026.

In its response the Scheme Advisory Board supports the comments made in a fuller response submitted by the Local Government Association and limits its comments to the proposals related to the "proposed decoupling of local government pension fund accounts from those of their host administering authority."

Investment | LGPS Advisory Board update

The LGPS Advisory Board has published a copy of the letter it has sent to the local government minister in relation to the letter and position paper that some funds will have received from the Palestine Solidarity Campaign.

All schemes

McCloud remedy | Civil Service Pension Scheme

The Public Service (Civil Servants and Others) Pensions (Remediable Service) (Amendment) Regulations 2025 have been made and will come into force on 17 November 2025.

The regulations relate to remediable service in the Principal Civil Service Pension Scheme and alpha. They amend the Public Service (Civil Servants and Others) Pensions Regulations 2014 and the Public Service (Civil Servants and Others) Pensions (Remediable Service) Regulations 2023.

Open consultation | Draft Judicial Pensions (Amendment) Regulations 2026

The Ministry of Justice (MoJ) has launched a consultation seeking views on the draft Judicial Pensions (Amendment) Regulations 2026.

The consultation paper explains that "amendments are proposed to increase the range of powers that the…MoJ has to collect pension contributions from members of the judicial pension schemes. The MoJ has become aware of some instances in which it has either not deducted, or deducted an incorrect amount of, members’ contributions from salary or fees at the time these were paid to members, as required by the legislation. In some cases, these missed contributions were recovered by other means, usually by lump sum payments that were proactively made by members. In other cases, the contributions remain outstanding so must be collected....The proposed amendments will increase the powers to collect (or to have collected) these payments, with retrospective effect."

The consultation is open until 25 November 2025.

Government's pensions review | Interim report in phase two expected in the spring

Phase two of the government's pensions review is considering the long-term future of the UK pensions system and how to support pensions adequacy.

Phase two is being conducted by a (revived) Pensions Commission, which is expected to publish its interim report in the spring.

It is possible that the Pension Commission's recommendations to the government on the broader questions of adequacy, fairness, and sustainability to guide the long-term future of the UK pensions system will include recommendations around pensions tax.

Private sector | Government moves to make collective defined contribution pension model more widely available

The government has published the response to its consultation on draft regulations to change the law to allow the creation of private sector "unconnected multiple employer" (UME) collective defined contribution (CDC) schemes. The final draft of the regulations has been laid before Parliament.

At the moment, only single and connected employers can establish a CDC scheme. In practice, this means that only larger employers can offer one.

Allowing UME CDC schemes will pave the way for CDC master trusts, enabling many more private sector employers to offer CDC to their employees.

The government has also launched a consultation on policy proposals for the creation of "retirement CDC schemes". These would allow members who have saved into a defined contribution (DC) pension to transfer their DC pot to a CDC scheme at retirement.

Although relevant to the private sector, the expansion of CDC is important because it is a pensions model which could allow "more people [to] receive a regular income for life that aims to keep up with rising prices without having to worry about managing their retirement money themselves or working out how long their savings need to last."

The Pensions Ombudsman  | Recent decisions

TPO confirms limited due diligence duties for statutory transfers made between February 2013 and the end of November 2021(CAS-81940-Z2S8)

TPO has set out its general view on trustees' duties when considering a member’s request to exercise a statutory transfer right from an occupational pension scheme.

This case involved a transfer from one occupational pension scheme to another under the legislation that applied to statutory transfers in 2014.

The ombudsman dismissed the complaint, concluding that:

• the statutory conditions for a transfer had been met;

• "there was no legislative or regulatory requirement on the trustee to conduct the due diligence contained in the [2013 Pensions Regulator] action pack, nor indeed to send [the member] the Scorpion leaflet"; and

• the trustee did not owe, and had not on the facts of this case assumed, any duty that might oblige it to carry out the due diligence included in the action pack and flag any concerns to the member.

On the last point, the ombudsman said that "there was no promise or representation, either implied or explicit, made to [the member] that suggested the trustee was conducting due diligence above and beyond that required to satisfy itself that the receiving scheme met the requirements for a statutory transfer set out in the Pension Schemes Act 1993. This includes the contents of the Scorpion leaflet, which was provided to [the member] and which I have read carefully, and which does not suggest that the Trustee is taking any additional steps."

This news item explains that the determination "provides an important, legal assessment of a trustee’s duty of care when considering a statutory transfer request from an occupational pension scheme, for the period from February 2013 until the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 came into force on the 30 November 2021. Although each case turns on its own facts, it is likely to inform TPO’s approach to similar cases."

The decision itself explains that, even for transfers in this period, the outcome could be different in any case in which the trustees did assume a duty to carry out due diligence (voluntarily decided to carry out the due diligence suggested by the action pack and communicated that it was doing so to the member), or in which the transfer was non-statutory or discretionary (not driven by a member's statutory right to transfer), or in which the transfer was from a personal pension scheme. April 2015 also saw the introduction of a requirement for members to take independent advice in relation to a transfer of in excess of £30,000 from a defined benefits arrangement to a defined contribution arrangement.

The DPO concludes that no earnings needed to meet the Pension Schemes Act 1993 conditions for a statutory transfer right  (CAS-78486-R9D8)

In another case involving a transfer from an occupational pension scheme to a small self-administered pension scheme (SSAS), the deputy pensions ombudsman (DPO) has decided that a member does not have to be an "earner" in order to have a statutory transfer right.

The DPO first considered whether the member had a statutory right to transfer. The member's representatives argued that she did not. Their argument was based on the interpretation of “transfer credits” that was accepted in Hughes v Royal London. This was that a member must have “earnings” at the time of a transfer, but those earnings could be from any source, they did not need to be from employment with a scheme employer. In this case, the member "was not in employment at the time of the transfer because her income as a foster carer was not employment income". As such,  the member's representatives argued that she was not an "earner" and so the trustee could not use her cash equivalent transfer value quotation to acquire transfer credits for her under the SSAS because "transfer credits" is defined in the Pension Schemes Act 1993 as “rights allowed to an earner under the rules of an occupational pension scheme” [emphasis added].

The DPO disagreed and relied on an alternative interpretation of "transfer credits" considered by the Judge in Hughes v Royal London to conclude that the member in this case had a statutory right to transfer. The alternative interpretation was that “transfer credits” are “rights which have the character of rights which were allowed to persons who were earners but without requiring the individual applicant for a transfer of the cash equivalent to be himself or herself an earner”. The result was that it was not necessary for a member "to be receiving 'earnings' of any kind at the time of the transfer and the reference to 'an earner' in the definition of 'transfer credits' is to be taken to refer to any person who is 'an earner' as defined in section 181 of the 1993 Act and not to [the member] as the individual for whom the transfer credits were being acquired. Instead, the definition of 'transfer credits' defines the type of rights that may be acquired under the receiving scheme if it is an occupational pension scheme."

The DPO concluded that it was possible rely on that alternative interpretation because " [w]here a legal proposition is assumed to be correct in a judgment" (in this case Hughes v Royal London) "but was not the subject of argument or consideration, it is not binding as authority for that legal point, even if it is an implicit part of the decision's reasoning". The DPO made no determination as to whether in this case the member's income as a foster carer constituted “earnings”.

On the question of whether there was any legal requirement for the trustee to conduct the due diligence set out in the Pensions Regulator's 2013 and 2014 Scorpion documentation, or to conduct due diligence above and beyond that required to satisfy itself that the conditions for a statutory transfer were met, the DPO referred to (and reached a similar conclusion to the one in) CAS-81940-Z2S8 – as previously discussed.

The DPO dismisses complaint that suspension of a widow's pension is a breach of human rights (CAS-48733-H1L4)

The DPO has not upheld a complaint by the widow of a member of the 1995 section of the NHS Pension Scheme that the suspension of her widow's pension under Regulation G1 of the 1995 Regulations when she started co-habiting with a new partner is an interference with her rights under the European Convention on Human Rights as incorporated into UK law by the Human Rights Act 1998.

The decision is likely to be useful reading for any fund which receives a complaint about suspension of a survivor's pension on the same or similar grounds.

House of Commons Library | New and updated briefing papers

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:

• COP30: The 2025 United Nations Climate Change Conference
• Climate Change at the International Court of Justice
• NHS pay and pensions

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