A report of the Head of Pension Administration provided Board members with copies of recent LGPS update reports taken to Pensions Committee.
The report provided an update on the ‘McCloud Case’, which related to the transitional protections awarded to members who were closest to retirement age when the Judges’ and Firefighter pension schemes had been reformed in 2015.
In addition, the report updated Members on the Scheme Advisory Board’s (SAB) review of LGPS Governance models and the proposed changes to Equitable Life policies, the legacy Additional Voluntary Contributions (AVC) provider for Merseyside Pension Fund.
At the meeting of the Pensions Committee 25 March 2019 (minute 4 refers) Members had been informed of the Court of Appeal’s decision, known as the ‘McCloud Case’. The Court had ruled that the transitional protection afforded to older members of public service pension schemes was unlawful on the grounds of age discrimination.
On the 27 June 2019, the Supreme Court had denied the Government’s leave to appeal, which meant that the Court of Appeal’s decision would be upheld, and the case would be returned to an employment tribunal for a detailed decision.
Yvonne Murphy, Head of Pensions Administration, set out the implications for the LGPS and reported that on 15 July 2019, the Chief Secretary to the Treasury had announced in a written statement that ”the government believes that the difference in treatment will need to be remedied across all public sector schemes; including the NHS, civil service, local government, teachers, police, armed forces, judiciary and fire and rescue workers.”
Members were informed that as the remedy would involve “levelling up” member benefits it was expected that any agreed outcome would increase the cost of LGPS pensions. However, there was no certainty on the level of the increased cost.
Yvonne Murphy further outlined the reasons for the uncertainty of cost and the impact on Triennial Valuation. It was highlighted that once the McCloud case was remedied, Funds must revisit employer contribution rates to ensure they remain appropriate in considering any additional costs.
In relation to the Good Governance Report the report set out that the aim was for an options report to be considered by the SAB in November. Any proposals agreed by the Board would be subject to a stakeholder consultation before being presented to MHCLG.
The Committee were also informed of the Proposal – Transfer to Utmost Life and Pensions. It was reported that in June 2018, Equitable Life had announced that it had entered into an agreement to transfer its business to ‘Utmost Life and Pensions’. Yvonne Murphy outlined the proposal and Members were informed that in August 2019, Equitable Life had written to all the LGPS administering authorities affected by the transfer to advise them that as both ‘Scheme Policy Holders’ and ‘Eligible Members’ they were able to vote:
1) to approve the ‘Scheme’.
2) to ‘Change the Articles’ which would make Utmost Life and Pensions
the Equitable Life’s only Member.
The deadline for the receipt of postal and online votes was 10am on 30 October 2019. If enough Scheme Policyholders supported the proposals, Equitable Life intended to return to the High Court on 22 November 2019 to ask it to approve the Scheme and the Transfer.
Resolved – That the report be noted.