Yvonne Murphy, Head of Pensions Administration, presented a report that  gave an update on the ‘McCloud Case’, which related to the transitional protections afforded to those members of public service pension schemes who were closest to retirement age when the schemes were reformed under the Public Service Pension Act 2013.

In addition, the report updated Members on the High Court decision to transfer Equitable Life policies, (the legacy Additional Voluntary Contributions (AVC) provider for Merseyside Pension Fund) to Utmost Life and Pensions with effect from 1 January 2020.

Yvonne Murphy reminded members that at the meeting of the Pensions Committee on 4 November 2019 (minute 37 refers) Members had been informed of the position in regard to the ‘McCloud Case’; specifically, that the case would be returned to an employment tribunal for a decision as to the remedy for addressing the difference in member benefits.

On 15 November the Scheme Advisory Board (SAB) had published an update to confirm that the LGPS would be dealt with separately to other public service schemes and that the remedy was likely to involve an extension of some form of the ‘underpin’.

Members were informed that technical discussions were expected to take place imminently between MHCLG and the SAB, with a consultation on proposed changes expected to follow. However, it was not expected that any remedy would be implemented before the end of the 2020-21 financial year.

As the remedy would be applied retrospectively, the Fund had communicated to employers the possibility that data such as part-time hours, service breaks, and the pre-2014 definition pensionable pay may need to be provided at a future date. There was therefore a requirement that employers had systems and procedures in place to collect and hold this data.

Members were informed that the SAB website provided an overview of the case along with FAQ and further information and could be accessed from the following link:

https://www.lgpsboard.org/index.php/structure-reform/mccloud-page

With reference to the update provided at the last committee meeting relating to the transfer of Equitable Life policies, The Head of Pensions Administration confirmed to members that the Fund as policy holder had voted in favour of the transfer by the deadline of 30 October.

Scheme policy holders and ‘eligible members’ had voted overwhelmingly in favour of the proposed changes. Consequently, the High Court had been asked to approve the Scheme and Transfer on 22 November 2019.

Court approval to transfer the business of Equitable Life to Utmost Life and Pensions had been received on 4 December 2019.  The Fund had updated members of the position by letter during December and had provided information on the AVC products provided by Utmost Life and Pensions along with the default AVC Funds selected by MPF upon the advice of its professional advisors. 

The Head of Pensions Administration informed the Committee that the next steps would be:

•  the ‘uplift’ would be applied to ‘with-profits’ policies as soon as practicable after 1 January 2020; and

•  ‘with-profits’ policies would be converted to unit-linked policies from 1 January 2020.

Resolved – That the report be noted.