PLSA LA Conference: LGA expecting consultation on reintroduction of public sector exit cap

The Local Government Association (LGA) has said it is expecting a consultation on the reintroduction of the cap on payments public sector bodies make in relation to employees’ exits from the Local Government Pension Scheme (LGPS).

Addressing the Pensions and Lifetime Savings Association (PLSA) Local Authority Conference, LGA head of pensions, Jeff Houston, said he expected “something, probably a consultation”, before Christmas.

A cap on public sector exit payments of £95,000 was introduced in November 2020, before being revoked in February 2021.

“You will all be aware of what has happened with the exit cap,” Houston stated. “It came in, came out, and is now probably going to come back in again.

“Before Christmas I would expect to see something, probably a consultation, from the Treasury that is going to indicate that we are going to see the exit cap in some form.”

Houston added that the Ministry of Housing, Communities and Local Government (MHCLG) would be issuing a request to LGPS funds for exit cap data “very soon”.

He noted that the request was likely to be for data from the past six or seven years, but that the LGA has been working to get them to a “more reasonable request” of the last two years.

“We’ve also managed to clarify exactly what they are asking for, because it was a bit fuzzy,” he added.

Discussing the recent announcement that a Public Service Pensions Bill was to be introduced by the government to address the discrimination identified in the McCloud ruling, Houston warned that any regulations would not be in place until the bill had passed through parliament.

“There will be a Public Service Pensions Bill probably kicking off next month,” he explained.

“We need to see the wording in that to see exactly how it’s going to work, and we will not see regulations on the statute books until that has received royal assent.

“We have a fair idea of what we will need to do on McCloud but there are still things like transfers that we are still talking to MHCLG about.

“We will be, starting this week, having some conversations with the software providers to make sure everyone is moving in the same direction. So, lots of work to do on both of those.”

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