New Consultation Launched into the McCloud Remedy and the Local Government Pension Scheme

Following the initial consultation in 2020 on the McCloud Remedy, the Department for Levelling Up, Housing and Communities (DLUHC) is seeking further clarification in a new supplementary consultation launched on 30 May 2023. The new consultation aims to gain further clarity on areas not addressed in the initial 2020 consultation as well as obtaining views on the draft scheme regulations that will eventually implement the remedy. By now we are all aware that the Government intends to address the McCloud discrimination by extending the ‘underpin’ protection to younger workers who were unlawfully excluded from this mechanism previously. The consultation aims to consider how this protection mechanism will work in relation to some specific areas:

• Aggregation – Establishing the rules surrounding members with multiple LGPS memberships and whether ‘underpin’ protection should be provided in some or all cases.
• Club Transfers – Considering the rules that should apply where a member with previous membership of another public service scheme transfers their benefits to the LGPS (known as a club transfer). In particular whether the member should have ‘underpin’ protection in respect of their LGPS membership.
• Flexible Retirement – Determining how the ‘underpin’ should work in flexible retirement, following concerns that those who chose not to take flexible retirement would have more ‘underpin’ protection than members that did. The consultation also considers implications for ‘partial’ flexible retirement.
• Divorce – The consultation considers how the scheme’s divorce and ‘underpin’ calculations interact following the 2020 consultation’s failure to address this.
• Injury Allowance – The consultation considers how retrospective increases to a member’s pension arising from the McCloud remedy may impact any injury allowances payable. The consultation suggests that no change to the regulations is required in respect of this.

The DLUHC also seek technical comments on:

• Excess Teacher Service – The consultation considers the situation for teachers who may have multiple periods of membership in the Teachers’ Pension Scheme and the LGPS.
• Compensation – The Public Service Pensions and Judicial Offices Act 2022 provides mechanisms for Administering Authorities to pay compensation to members in certain situations following the McCloud discrimination. The consultation questions whether it is appropriate that such decisions are made at a local level or whether national support should be provided, particularly given the potential for inconsistency across authorities.
• Interest – The consultation reviews the interest terms that will apply where payments were made later than they would have been had the McCloud discrimination not occurred.

The DLUHC also aims to consider alongside the guidance working group, whether statutory or SAB guidance would be a useful support tool; such guidance would need to be published ahead of the final regulations coming into force on 1 October 2023. The consultation will run from 30 May 2023 to 30 June 2023 and can be accessed here.

If you wish to discuss this further, please contact Nigel Bolton, Partner.

This article was co-written by Sadie Goodrum, Trainee Solicitor.