The report of the Director, West Yorkshire Pension Fund, (Document “B) provides an update on changes to the Local Government Pension Scheme (LGPS) 2014 and provides information on associated matters.

Recommended –

That the report be noted.

(Tracy Weaver – 01274 433571)

The report of the Director, West Yorkshire Pension Fund, (Document “B) provided an update on changes to the Local Government Pension Scheme (LGPS) 2014 and provided information on associated matters.

The report revealed, amongst other updates, that the consultation had closed on the Consultation on Fair Deal – Strengthening pension protection and on Local Valuation Cycle and the Management of Employer Risk to which responses were awaited.

An update on McCloud reported that the Department for Levelling Up, Housing and Communities (DLUHC) were expected to issue a full response to consultation and had been expected to publish draft regulations in the spring.  As the overriding legislation was in place the Fund could commence the necessary preparations and software suppliers could begin to update systems.

A Member questioned why the response to the McCloud remedy had not been received in Spring, as has been expected, and it was explained that Fund’s had not yet been consulted.  People were protected until 1 April 2022 but it was not intended to have regulations in place until October 2023. 

It was queried if software suppliers could build their systems without the regulations being in place and explained that this had never been done in the past because of the risk if systems were built before requirements were confirmed.  More recently suppliers had liaised with the Local Government Association to get an understanding of the likely requirements and impact. 

With regard to the Money and Pensions Service – Pensions Dashboard update, Members were informed that the Fund was waiting for TPR to published a new code of conduct and more detailed information would be provided in future reports.

A Member requested clarity on the McCloud remedy.  It was explained that when public sector pension schemes were amended, in 2014, members within 10 years of retirement were given protection via an uplift in benefits if they were deemed to be disadvantaged by the changes.  The uplift had since been deemed unfair on younger staff and anyone in the scheme was now entitled to the same protection.  The remedy would have a big impact on the fund in terms of the work generated as information must be gathered over an eight-year period.  Some employers may no longer exist of have outsourced pension administration.  There were up to 80,000 members affected some of which would have retired or died and their benefits must be assessed.

The impact on the fund and the delay in receipt of regulations was questioned.  It was confirmed that there was no delay in payments as members had already been paid, however, benefits must be assessed and recalculated.  Provisions for the payment of interest were already in the regulations but there could be lots of issues with income tax.

It was reported that the number of members who had been impacted detrimentally would be low.  Some members were expecting windfalls but this was unlikely as the provisions of the amended were more favourable.  

It was explained that the fund had factored a value of 0.9% within liability costs for the McCloud remedy.  The cost of the software systems required to administer the remedy would be £1.4 – £2 million for all funds supported. 

Resolved - 

That the report be noted.

Action: Director, West Yorkshire Pension Fund