Yvonne Murphy, Head of Pension Administration, provided members with an update that covered the long-awaited Government response to the consultation on restricting exit payments in the public sector and the publication of the draft Restriction of Public Sector Exit Payments Regulations 2020 issued on 22 July 2020. 

  The report also raised awareness of the Written Ministerial statement on survivor benefits payable from public service pensions in response to an Employment Tribunal relating to the Teachers’ Pension Scheme. The case concerned the lower survivor benefits paid to a widower of a female scheme member compared to those paid to a same sex survivor or a widow of a male scheme member.

  The Head of Pensions Administration provided details of the background and key issues in the report and noted that HMT had published its response to the consultation issued last year, seeking to cap public sector exit payments at a value of £95,000, along with the draft regulations; The Restriction of Public Sector Exit Payments Regulations 2020. This could be found on the following link:

  https://www.gov.uk/government/consultations/restricting-exit-payments-in-the-public-sector

   It was noted that the regulations would affect LGPS members in England and Wales who currently qualify for an unreduced pension because of redundancy or efficiency retirements and included a list of employers who will be covered by the cap. 

  The Head of Pension Administration also highlighted the key points in the response and responded to members’ questions.

  In relation to survivor benefits for opposite sex widowers pensions it was reported that on 20 July, HMT had issued a statement confirming that, following a successful case against the Teachers’ Pension Scheme (TPS), known as the “Godwin Case” historical widowers’ pensions in the public sector pension schemes discriminated against male members. Details could be viewed on the following link;

  https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2020-07-20/HCWS397/

   Members were informed that Departments responsible for the administration of affected schemes would consult on and take forward changes as soon as possible. For the LGPS this would affect surviving widowers where their deceased spouse left prior to April 1998. In some cases, this would lead to an increase in the widower’s pension in payment. In other cases (where the member left prior to April 1988) this would lead to a new widower record needing to be set up, as previously there was no widower’s pension entitlement.

Members were informed that the need to re-visit hundreds, perhaps thousands of historical deferred and pensioner records in relation to the restatement of survivor pension entitlements would only add to the governance and administration burden Funds were facing on the back of the proposed McCloud remedy and the implementation of the exit cap.

The Head of Pension Administration provided an outline of the impacts and considerations as the

  government were expecting employment contracts, compensation schemes, and pension schemes to be changed to accommodate the £95k exit cap. More details were expected to emerge about updated guidance and HMT Directions.  Both Funds and employers would need to ensure they were making plans to prepare for the implementation as the detail emerges.

   The Chair noted that individuals could also respond to the Exit Cap consultation which would close on 9 November 2020 and encouraged them to do so.

  Resolved - That the report be noted.