In the second and last instalment for pension awareness week, we have an update on the support in place for the Cyber incident as well as an update on the McCloud Remedy that will have a material change to how public pension schemes are required to ensure those in scope must use the most beneficial calculation of their benefits.
Like most things when it comes to pensions - it’s rather complex. But luckily, we’ll be recording a video once these changes are formally in the regulations which will help set this out in a way that’s easy to follow.
We’ve also provided an update on the Pensions Dashboard programme (PDP).
Cyber incident update about your Experian membership
In our letter to impacted members dated 6 July, we advised that you had been given 12 months membership to the Experian service called ‘Identity Plus’, this has now been increased to 24 months. If you’ve already activated your Experian membership, no further action is required. The increased period of membership also takes effect automatically. Once registered the membership expiry date will initially be displayed as 12 months service.
This will automatically be updated to reflect 24 months service which Experian will aim to complete within 90 days of registering. This won’t impact the use of the service and no interruption will be experienced whilst the update is made. If you haven’t registered yet, you’ll need to act quickly if you wish to, as your unique Experian code expires on 6 October.
Please note: If you’re a deferred member living outside the UK, the expiry date for your Experian code will be 27 September. For pensioners who were first contacted in early June, these members were sent a reminder letter on 21 August as their codes were due to expire on 31 August.
McCloud judgment remedy
The ‘McCloud judgment’ is commonly used to refer to the court judgment which ruled that the protection given to older members of the public service pension schemes, when they reformed to CARE Schemes, was discriminatory.
For the LGPS, the discrimination related to the underpinning of the pension a member would receive for pensionable service during the period 1 April 2014 to 31 March 2022, as this protection was only applied to members who, on 31 March 2012, were within 10 years of reaching their Normal Pension Age (NPA). Members who benefited from this protection would, on their retirement, receive the higher of their CARE pension or the pension they would have received if the LGPS had continued to be a final salary scheme; this protection is referred to as the statutory underpin.
The government intends to extend the statutory underpin to all members who were previously excluded because they were more than 10 years away from reaching their NPA. In addition, the government aim to publish the necessary regulations to amend the LGPS later this year; although the amendment regulations will apply retrospectively from April 2014, they won’t come into force until October 2023.
The underpin calculation will be based on your final pay at the underpin date, even when this is after 31 March 2022. There’ll be 2 stages to the underpin calculation:
- The first on the ‘underpin date’ – this will be your date of leaving the Scheme or, if earlier, your NPA; the calculation will also be based on the CARE pension you’ve built up over the period 1 April 2014 – 31 March 2022, as well as the final salary pension you would’ve built up over the same period, had the final salary scheme still been in place
- The second when the benefits are paid
It’s important to note that it is unlikely that many members will see a change to their LGPS benefits. This is because CARE pension builds up much faster than final salary pension. For example, £10,000 of pensionable pay would build a CARE pension of £204.08 whereas the final salary pension would only be £166.67.
However, even though the statutory underpin may rarely apply, it will be an automatic protection. This means you won’t need to apply for it; if you’re eligible to benefit from it, you’ll get it.
Pensions dashboard update
If you’re not already aware, the Pensions Dashboard Programme (PDP) is a government-led initiative to allow people to view all their pensions benefits online in one single place (i.e., a ‘dashboard’). Once pension schemes are ‘connected’ to the Pensions Dashboard, people will only need to sign up and login to see the current and future values of their collective pension benefits.
Due to the increasing complexity of implementing the PDP, the Pensions Minister, Laura Trott, announced in June 2023 that the PDP would be delayed, and that large to medium pension schemes (like the Local Government Pension Scheme) would be required to ‘connect’ to the Pensions Dashboard by 31 October 2026.
Read Part 1 of our EAPF Pension Awareness Week campaign.