PLSA LA Conference: LGPS McCloud remedy regulations expected to be in effect from October 2023

McCloud remedy regulations that would extend the Local Government Pension Scheme (LGPS) statutory underpin protection to younger members of the scheme are expected to come into force from October 2023.

Speaking at the PLSA Local Authority (LA) Conference 2022, Local Government Association senior pensions adviser, Lorraine Bennett, said that the Department for Levelling Up, Housing and Communities would likely respond to its consultation on the regulations in the autumn.

“The Department for Levelling up, Housing and Communities is the department responsible for making the LGPS regulations, and they’ve already consulted on their approach to extending the underpin,” she stated.

“They haven’t yet responded to that consultation. We were hoping to see their response before summer recess, but we have now been informed that is likely to be autumn and there will be draft regulations to follow shortly afterwards.

“We are expecting those regulations to take effect from October 2023, but they will have retrospective effect back to April 2014 and England and Wales, and 2015 in Scotland and Northern Ireland.

“From 1 April 2022, the underpin period has ended, so there is no underpin for that membership going forward. So, the period that we are looking at applying this remedy, removing the discrimination, is from 2014-22 in England and Wales, and 2015-2022 in Scotland and Northern Ireland.”

Also speaking at the session, Tyne and Wear Pension Fund principal pensions manager, Heather Chambers, warned of the data challenges that the scheme faces in meeting the new regulations.

“A lot of the data we need to do this new calculation is not held within the fund, so this means that we need to go back to employers and obtain that data,” she said. “Because of the nature of the LGPS we have some problems with that.

“The LGPS is also a very transient membership. We have a big challenge on putting that all together and what we really need is guidance.

“To upload so much data, we have had to work with our pension providers to automate because we could not have done that task manually. Some solutions have been thought of, which have been very helpful, but because of the nature of the LGPS, there is still a significant amount of manual resource to put that right.”

Furthermore, Chambers noted that this was just the first step, as the LGPS then needs to get that data in and, when the regulations come through, put in the underpin retrospectively.

“We need to do a huge retrospective exercise to put those records right,” she continued.

“We are heavily reliant on our software providers, we need them to update our systems and calculate the new underpin, but we also need them to help us run through bulk calculations.

“As administrators we cannot do all this as manual calculations. We need to recognise that we can automate, and we will automate where we can, but to do this we need some additional resources.

“What we are now finding in the industry, post-pandemic, the labour market isn’t being very kind to us, so we are struggling to get those resources to get on and do a good job.”

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