The Local Government Pension Scheme Advisory Board (SAB) has released guidance for local authority pension schemes on how to deal with the impact that the age discrimination court case regarding firefighters' and judges' pensions may have.

In December 2018, firefighters and a group of 230 judges won their legal case against the government that changes made to their pension schemes were discriminatory.

However, the government is currently seeking permission to appeal the decision.

As a result, the cost cap process was paused in January 2019 and the ambiguity surrounding the outcome of the case has created a scheme liability “unknown in both scale and timing”, creating uncertainty in the build-up to scheme valuations.

Speaking at the Pensions and Lifetime Savings Association's Local Authority Conference, Government Actuary's Department deputy chief actuary, Michael Scanlon, noted: “HM Treasury announced in January that the cost cap process and member benefit improvements will be paused.

“If the government was ultimately successful in its appeal, then those benefit improvements would be introduced, if necessary with retrospective effect from 1 April this year.”

SAB advised that, if there was still no finalised outcome by 31 August 2019, then the scheme benefit design used in the valuation “should be set out in current regulations”.

In setting employer contributions, local authority schemes have been advised to consider how they approach the risk and potential extra costs, while administering authorities should “re-visit employer contributions”.

SAB also recommended that schemes take account of the regulatory requirements, FSS provisions, then discuss what approach would be best with their actuaries and assess the potential impact of worst case scenarios.

Minister for Local Government, Rishi Sunak, added: “No doubt there will be judgements that will require careful consideration, where the ramifications may be very wide-ranging and require quite deep thinking.”

Share Story: