The Head of Pension Administration for the Merseyside Pension Fund presented the report of the Director of Pensions which provided an overview of proposed changes affecting the future administration and governance of the Local Government Pension Scheme (LGPS). The McCloud judgment was detailed, where the Govt extended protection to all Members who had membership of the final salary scheme prior to 31 March 2012 with the aim to remove discrimination from the reformed schemes. High level analysis identified that 34,000 members of the Merseyside Pension Fund met the criteria to qualify for protection and informed by the actuarial estimate of a 1% cost of total liabilities this equates to around 340 members who would likely receive an additional underpin amount. This is because the Care scheme had a higher accrual rate than the final salary scheme. The potential administration cost of identifying the affected persons was significant and was dependent of the complexity of the final regulations and the system supplier’s capacity to deliver bulk calculations.

Members confirmed that new rules allowing members to opt out for a year did break the continuity of their service so that they began as a new member once the opt out ended, though their deferred benefit would continue to qualify for any protections afforded under the McCloud remedy.

Resolved –

That the upcoming administration and governance changes to the LGPS be noted.