Agenda item

For members to receive an update on the McCloud case and the implications of this for the administration of the Croydon Council Local Government Pension Scheme.

The item was introduced by the Head of Pensions & Treasury. Members of the Board were reminded that Bob Holloway, the Secretary to the Local Government Pension Scheme Advisory Board, had attended their last meeting and outlined the McCloud case. As a result of the ruling, the Local Government Pension Scheme (LGPS) would change for some members. It had been determined that previous changes to the scheme had discriminated on the grounds of age as they had only provide protection those members within 10 years of retirement age.

The Ministry of Housing, Communities and Local Government had conducted consultation on possible remedies in order to comply with the McCloud judgement. The actuaries for the Croydon Local Government Pension Fund had been engaged to quantify the impact of the judgement and had identified that 15% (5,000) of members may need to be reviewed. This would be more complex where the pension was already in payment or the member had passed away. It was anticipated that extra administration resource would be needed to request additional information from employers in order that the reviews could happen. The pension software needed to support this work was being explored. Concern was expressed about beginning the work too soon before there was clarity on what data would be required.

Members of the Board explored a number of issues arising from the report.

In response to a member question, the The Head of HR and Finance Service Centre signposted page 31 of the agenda pack for information on how the McCloud judgement might affect individual employers in the scheme.  Concern was expressed regarding the time estimated for processing the new requirements and whether this was sufficient. The Pension Manager clarified that the data requirements were not yet known and therefore notification could not yet be given to employers. It was envisaged that some employers would require a separate engagement process as the aim was to implement with minimal impact. Whilst it was originally envisaged that the results of the McCloud judgement would have to be implemented by 2022, it was thought this might shift as a result of additional requirements also needing to be implemented arising from the £95K exit cap.

The Head of HR and Finance Service Centre confirmed to the meeting that the £95K exit cap was being brought into law imminently having completed its passage through Parliament. The LGPS was still consulting on the exit cap. It was expected that the Local Government Association (LGA) would be meeting with MHCLG and a joint statement provided. However, it was clear that beyond 4 November 2020, no one leaving any public sector post would be able to receive an exit payment beyond the £95K limit.

Additional reassurance was provided about the resource needed to implement the McCloud judgement; more information was required from the software provider with all boroughs in the same position. Further information was awaited before action plans could be developed. Options for collaboration with other boroughs were being explored through the London Pension Officers Group.

The Independent Chair highlighted that the Board was expecting a detailed project plan at the appropriate time addressing the McCloud judgement and that the necessary additional resources would be approved by the administrating authority.

RESOLVED: The Board AGREED to note the report.