Govt McCloud proposals for LGPS could take over two years to implement

The Pensions and Lifetime Savings Association (PLSA) has warned that proposed changes to the Local Government Pension Scheme (LGPS) following the McCloud judgment could take over two years to implement.

As part of its response to the government’s ongoing consultation on the proposed response to the McCloud judgment, the PLSA warned that the 12-month timeframe proposed by the government to aggregate previous periods of LGPS membership may not be enough.

They recommended instead that administrative authorities be given the discretion to extend this 12-month period "given the complexity of the changes", noting that when discussing the changes with LGPS members, almost 40 per cent stated that this process would take over a year to complete.

Furthermore, it stated that in some cases, LGPS members have said that changes could take over 24 months to fully implement.

PLSA head of DB, LGPS and standards, Joe Dabrowski, commented: “Implementing these changes will present a significant challenge to funds and their administrators given the number of members who could be potentially impacted.

“A substantial number of pension records will need to be updated while benefit calculations relating to members who have left the scheme since 2014 will need to be reviewed.

“This will be a very large undertaking, particularly at a time where pension administrators are already stretched due to the impact of Covid-19 and an increasing workload resulting from GMP rectification as well as projects to improve their data and systems."

Dabrowski emphasised that considering this, it is important that administering authorities are given enough time to implement the proposals to ensure that other tasks, such as benefit payments, do not suffer as a result.

Industry experts previously also warned that the proposals could also see LGPS members over 55 facing a "significant cut" to their benefits upon redundancy, as a result of "ambiguous wording" in the proposals.

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