McCloud changes may take up to two years, PLSA warns

Proposed changes to the Local Government Pension Scheme (LGPS) members in England and Wales as a result of the McCloud judgement could take over two years to implement, the Pensions and Lifetime Savings Association has warned.

The McCloud judgement followed a ruling made by the Court of Appeal in December 2018 stating that the pension reforms unlawfully treated scheme members differently based upon the members’ age on 1 April 2012.

In its response to the government’s consultation on how the judgement would affect LGPS members, the PLSA said the 12-month timeframe proposed by the government to aggregate previous periods of LGPS membership may not be enough and that it recommends administrative authorities should be given the discretion to extend this period given the complexity of the changes.

Almost 40% of LGPS members told the trade body that the process would take over a year to complete and in some cases, members have said that changes may take over 24 months to fully implement.

Joe Dabrowski, Head of DB, LGPS, and Standards at PLSA, said that implementing the changes would present a significant challenge to funds and their administrators, given the number of members who could be potentially impacted.

“A substantial number of pension records will need to be updated while benefit calculations relating to members who have left the scheme since 2014 will need to be reviewed,” he said. “This will be a very large undertaking, particularly at a time where pension administrators are already stretched due to the impact of Covid-19 and an increasing workload resulting from GMP rectification as well as projects to improve their data and systems.”

It is therefore important that administering authorities are given enough time to implement the proposals to ensure that their other tasks, such as benefit payments, do not suffer as a result, he added.