McCloud Case

When the Government reformed public service pension schemes in 2014 and 2015, they introduced protections for older members. In December 2018, the Court of Appeal ruled that younger members of the Judges' and Firefighters' Pension schemes have been discriminated against because those protections did not apply to them. 

The Government has confirmed that there will be changes to all main public sector schemes, including the LGPS, to remove this age discrimination. This ruling is often called the 'McCloud judgment' after a member of the Judges' Pension Scheme involved in the case. 

What does it mean for the LGPS?

When the LGPS changed from a final salary to a career average pension scheme in 2014, members who were within 10 years of their Normal Pension Age (usually age 65) on 1 April 2012 were provided with a protection called the 'underpin'. When a protected member takes their pension, the benefits payable under the career average and final salary schemes are compared and the higher amount is paid. 

On 13 May 2021, the Government issued a statement confirming the key changes they will make to the LGPS to remove the age discrimination. Following a consultation, the Local Government Pension Scheme (Amendment) (No. 3) Regulations 2023 were laid in parliament on 8 September 2023. These take effect from 1 October 2023.

What are the key changes?

  • The period of protection will apply from 1st April 2014 to 31st March 2022 but will end earlier if a member stops paying pension contributions into the scheme or reaches their final salary scheme normal retirement age (normally 65) before 31st March 2022.

  • If a member continues to pay pension contributions into the scheme after 31st March 2022, the comparison of their benefits will be based on the earlier of the following two options:

    • Their final salary when they leave the LGPS, or

    • Their final salary when they reach their final salary scheme normal retirement age.

  • The underpin protection will apply to qualifying members who stop paying pension contributions into the LGPS, whether their pension is being deferred or paid to them as soon as they leave.

  • A ‘two stage process’ will apply for assessing the underpin so that, where there is a gap between the member’s last day of paying pension contributions and the date they take their pension, they can be assured that they are getting the higher benefit.  This is because the underpin will be assessed when they leave, and again when the pension is being put into payment

  • These changes to the scheme will be back-dated to 1 April 2014 

The Department for Levelling Up, Housing and Communities (DLUHC) together with the Local Government Pension Scheme Advisory Board (SAB) has published a McCloud member factsheet which summarises the McCloud judgment and changes made to the Local Government Pension Scheme.

Will the changes apply to me? 

Your LGPS pension is protected by the McCloud remedy if you were a member of the LGPS or another public service pension scheme before 1 April 2012 and also have service after 31 March 2014 (without a break of more than five years). 

If you left the scheme before 1 April 2014 you built up benefits in the final salary scheme only. These changes will not affect your pension. 

Will my pension increase? 

Most members are unlikely to see an increase to their pension, and where an increase is applied, it is likely to be small. This is because most members will build up a higher pension in the career average pension scheme (1/49 accrual rate) than they would have under the final salary scheme (1/60 accrual rate). 

When will the changes come into effect? 

The LGPS McCloud remedy regulations take effect on 1 October 2023. Qualifying members’ pensions will be reviewed from this date onward.

What do I need to do?

You do not need to take any action. The Government has confirmed that members who qualify for protection do not need to make a claim for the changes to apply to them.

If you retire on or after 1 October 2023, and qualify for protection, the pension calculations undertaken by Staffordshire Pension Fund will take into account your underpin rights, where applicable, straight away. Please note that there may be circumstances which mean it will not be possible to fully take into account the regulations (for example, if the necessary data is unavailable from your employer). In such cases, we will seek to rectify the situation as soon as we can.

The LGPS McCloud remedy has retrospective effect to 1st April 2014. If you retired before 1 October 2023 and are eligible for the underpin protection, we will revisit your case as soon as possible to work out if you are due an addition to your existing pension.

Further Information

For further information on the McCloud judgment and changes to the Local Government Pension Scheme (LGPS), please see the factsheet below.

The national LGPS website for members also has a dedicated area to the McCloud Remedy. This includes information about the McCloud remedy, a video to explain the changes, frequently asked questions and an interactive tool to find out if you are affected.

If you have any questions about your LGPS membership or benefits, please contact us.