The McCloud Judgement and Your Pension

The LGPS McCloud remedy regulations come into force from 1 October 2023. The McCloud remedy removes age discrimination from the LGPS regulations and extends protections to qualifying members of our scheme. You do not need to take any action as these protections will be applied automatically to eligible scheme members, however most members are unlikely to see an increase to their pension. Where there is an increase, it is likely to be small. This is because most members build up a higher pension in the career average scheme than they would have built up in the final salary scheme. We will be in contact with those members who are affected by the changes.

What is the McCloud judgement?

When the UK Government introduced reforms to public sector pension schemes in 2014 and 2015, they included protections for older scheme members (the underpin). In December 2018 the Court of Appeal ruled that younger members of the Judges and Firefighters Pension schemes were discriminated against because the protections did not apply to them.

On 1 April 2014 the LGPS changed from being a final salary scheme to a Career Average Revalued Earnings (CARE) scheme. Originally the underpin protections were brought in to ensure that older scheme members who were approaching retirement wouldn’t be negatively impacted by the changes.  The pension that these members built up in the CARE scheme between 1 April 2014 and 31 March 2022 (or their final salary normal pension age, if earlier) was compared to the pension they would have accrued in the final salary scheme if it hadn’t closed, and if the final salary pension would have been higher, their CARE pensions were enhanced.

From 1 October 2023 the underpin has been expanded to include younger scheme members too.

Who is impacted?

Not all LGPS members are impacted by the McCloud judgement, however the changes may affect you if:

• You were paying into the LGPS, or another public sector pension scheme, before 1 April 2012
• You were also paying into the LGPS at any point between 1 April 2014 and 31 March 2022
• You have been a member of a public sector pension scheme without a continuous break of more than 5 years

What do I need to do?

You do not need to take any action, if you qualify for the expanded underpin protections they will be applied automatically, regardless of whether you are currently contributing to the scheme, hold deferred benefits or are already receiving payment of your LGPS pension benefits.

Will my pension increase?

This will depend on your personal circumstances when you take your pension, however most members are unlikely to see an increase to their pension. Where there is an increase, it is likely to be small. This is because most members build up a higher pension in the career average scheme than they would have built up in the final salary scheme.

For those members who are actively contributing to the LGPS or have deferred pension benefits, from 2025 your annual benefit statements will include further information about whether the expansion of the underpin has impacted your pension benefits.  For those members who are already in receipt of their pensions, we will contact you to confirm whether your pension your pension is due to be increased.

Further information:

The Department for Levelling Up, Housing & Communities (DLUHC) has produced a factsheet about the McCloud judgement.

The National LGPS website has extensive FAQ about the McCloud judgment, including a quick video which explains the LGPS McCloud Remedy.

If you have further questions about the LGPS McCloud Remedy, please contact pensions.technical@essex.gov.uk.