McCloud Remedy

When the Local Government Pension Scheme (LGPS) changed from a final salary to a career average pension scheme in 2014, protections for older scheme members were introduced. Similar protections were provided in other public sector pension schemes.

The Court of Appeal in December 2018 found in the McCloud and Sargeant cases, unlawful age discrimination in transitional protection arrangements (that did not apply to younger members) in the Judicial and Firefighters’ Pension Schemes when they moved from a final salary scheme to a career average pension scheme. This ruling applied to all public service pension schemes.

In relation to the LGPS, the age discrimination operates in the different treatment that exists between two groups of LGPS members:

• Group1 were members in service on 31 March 2012 and were within ten years of Normal Pension Age (NPA) on 1st April 2012, therefore benefiting from underpin protection and ‘better off’ than Group2.
• Group2 were members in service on 31st March 2012 and were more than ten years from NPA, were not eligible for underpin protection and therefore ‘worse off’ than the protected members (as they were not guaranteed a pension of at least the level they would have received in the final salary scheme).

The Government as proposed extending underpin protection to younger scheme members as part of the McCloud Remedy. Both groups will be given underpin protection from 1st April 2014 to 31st March 2022 (or to the members’ underpin date, where this is earlier). The Government plans to introduce revised regulations which will apply retrospectively to 1st April 2014.