Employment and pensions

UK Public Service Pensions Update | October 2022

Published on 27th Oct 2022

Welcome to the latest edition of the UK Public Service Pensions Update

This month we discuss developments ranging from a delay to the McCloud remedy regulations for the Local Government Pension Scheme (LGPS) to Pensions Dashboards developments.

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

McCloud | Update on timings

The minutes of the September 2022 Local Government Pension Scheme (LGPS) Communications Working Group meeting report that the Department for Levelling Up, Housing and Communities' (DLUHC) response to the 2020 consultation on draft regulations to implement the McCloud remedy in the LGPS is now expected "early in 2023 rather than autumn this year". We anticipate this will have a knock-on effect on the other steps and timings discussed in our August 2022 newsletter

McCloud | Injury to feelings

The Fire Brigades Union (FBU) has announced that the government has made an offer to settle the injury to feelings claims of members who completed FBU surveys in 2015 and 2020. The FBU has only accepted the offer made in relation to the individuals who completed the 2015 survey. Claims for out of pocket losses are still in progress. You can read more in this circular, which also reports progress on other claims and reports settlement of the injury to feelings claims made by Police Pension Scheme members.

The circular says that the FBU has not at this stage "filed any LGPS claims. That is because, in most if not all circumstances, the 2014 LGPS Scheme is a better scheme than its predecessor for moderate earners. If they were filed the Government would certainly argue that each Claimant has to prove that he or she would have preferred staying in the 1997 Scheme, and personally suffered some sort of injury to feelings".

Letter to minister | Fair Deal

In our last newsletter, we reported that the DLUHC had indicated that it was "reconsidering its approach to Fair Deal in the context of the" LGPS and planned to run a further consultation. The LGPS scheme advisory board has now written to the minister to ask whether the policy is under active consideration and, if so, how it can contribute to the process.

Consultation response | Public service exit payments

In our August 2022 newsletter, we reported that HM Treasury was consulting on draft guidance on the approval of high-value public service exits and special severance payments.

The LGPS scheme advisory board has published a copy of its response to this consultation. The response notes that local government workers are not in scope but seeks clarification of whether the new process will apply to other LGPS employers – for example, academy schools and non-departmental public bodies – and addresses points that would affect them.

(The DLUHC plans to consult further on exit pay arrangements for local government workers, but has not given an indication of likely timing.)

Pensions Dashboards | Important developments

The government has published:

  • The response to its second consultation on the draft pensions dashboards regulations (covering the notice period before the Dashboards Available Point and information sharing between the Money and Pensions Service and the Pensions Regulator);
  • Final Pensions Dashboard regulations – which confirm the staging date for public service pension schemes; and
  • Draft guidance on applications to defer a staging deadline.

In addition, regulations have been made to bring into force the pensions dashboards provisions in the Pension Schemes Act 2021 and the Financial Reporting Council has published the revised Actuarial Standard Technical Memorandum 1 for pension illustrations for defined contribution benefits,

Funds should refer to the Pensions Regulator's initial guidance on preparing for pensions dashboards and continue to prepare.

Transfers | Time to contact your members?

The Financial Conduct Authority has relaunched its ScamSmart campaign after conducting a survey which showed that a quarter of consumers would withdraw pension savings to cover the cost of living, making them vulnerable to scammers.

Funds should consider the information the FCA has provided and consider the need to communicate with members and update member communications.

The Pensions Regulator | New enforcement policy

The Pensions Regulator has published a new enforcement strategy, together with a new, consolidated, enforcement policy and an updated prosecution policy. The new enforcement policy replaces the one that has applied, to date, to public service pension schemes.

The Pensions Regulator | Looking ahead

The Pensions Regulator has published the speech that its CEO Charles Counsell gave at the 2022 Pensions and Lifetime Savings Association Annual Conference. The speech is essential reading for funds, and refers to the regulator's recent statement on managing investment and liquidity risk in the current economic climate.

Data protection | UK-US data transfers

Funds or their service providers that engage in UK-US data transfers might like to read our Insight looking at recent developments in this area, including the intention to prepare a UK-US adequacy regulation in Parliament in early 2023.

Consultation response | NHS Pension Scheme

The Department of Health and Social Care has published the response to its consultation on further extending the suspension of certain NHS Pension Scheme rules in order to allow retired and partially retired staff to return to work or increase their working hours without having their pension benefits suspended or abated. The rules have been suspended since March 2020 but, with the current suspension set to expire on 31 October 2022, the consultation proposed a further suspension to 31 March 2023.

The consultation response confirms that the government has decided to continue the temporary suspension of abatement of Special Class Status members who retire and return to work between age 55 and 60 in the 1995 section until 31 March 2025.

It also confirms that the government "intends to launch a public consultation in autumn 2022 on a package of new retirement flexibilities, including proposed amendments to the regulations to allow members of the 1995 section to partially retire but continue working and building up further pension, and provision for pensionable re-employment for those who have already retired and then returned to work. The consultation will also propose the permanent removal of the 16-hour rule from the 1995 section from 1 April 2023. On that basis, the government intends to continue with the proposal as consulted on and extend the suspension of the 16-hour rule to 31 March 2023, ahead of its proposed permanent removal the following day.

"As the government is proposing to introduce partial retirement to the 1995 section, it is proportionate to introduce draw-down abatement, for those whose pensionable pay does not decrease by at least 10% after partially retiring, to the 1995 section from 1 April 2023 (this will be set out in the autumn consultation). This means that draw-down abatement in the 2008 section and 2015 scheme, which has been suspended since March 2020, will be re-introduced from 1 April 2023 to align all schemes in this respect. Allowing members of the 1995 section to claim a portion of their benefits and continue working will provide a vital capacity boost to the NHS workforce."

The regulations needed to extend the three measures have been made.

Judicial pensions | Commencement regulations

Regulations have been made which will bring into force on 1 October 2022 the provisions in the Public Service Pensions and Judicial Offices Act 2022 relating to judges "sitting in retirement".

Pensions Ombudsman | Various

The Pensions Ombudsman (TPO) has not upheld a complaint by a deferred member of the LGPS who did not want her LGPS benefits to come into payment at age 60 because she will need to work until she reaches her state pension age of 66 (Local Government Pension Scheme - CAS-65170-S1N9). The decision is interesting because the member raised discrimination (sex and age) and human rights concerns, referring to the decision in McCloud and to a Parliamentary and Health Service Ombudsman ruling on the state pension age. It is possible that, because of the publicity these and other high-profile cases have attracted, more members will raise discrimination complaints.

TPO confirmed that there was no discrimination on grounds of sex because the provisions in question (contained in the 1995 Regulations) apply equally to male and to female members. TPO also dismissed the other complaints raised by the member. The case also shows the importance of taking care around the benefit statements issued to members who have an ongoing complaint. Any error, even if caused by automated systems, gives the member further grounds for complaint.

TPO has handed down its decision in a complaint by a member of the NHS Pension Scheme who applied for ill health retirement as an active member. The complaint was not upheld but the decision is a helpful reminder of some of the key considerations for ill health retirement decision makers. (The NHS Pension Scheme - PO-26441.)

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:

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

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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