McCloud Judgement

The McCloud Judgement relates to two employment tribunal cases that were brought against the Government. The claimants argued that protection introduced following changes to public sector pension schemes in 2014/2015 amounted to unlawful discrimination as the protections only applied to certain older members.

You do not need to contact us or take any action. We will be looking at all eligible records and performing the necessary checks and calculations.

In Brief

  • Back in April 2015 when pension rules changed, protection was put in place for older members to ensure their pension would not be negatively impacted. This protection was known as the “underpin.”
  • The underpin compared the pension these members built up versus the pension they would have built up had the rules not changed. If their pension would have been higher under the old rules, their pension is increased.
  • Due to the court ruling, underpin protection has been expanded to include younger members and the benefits they built up between 1 April 2015 and 31 March 2022.
  • Not all members are eligible for underpin protection. For example, you must have been paying into the pension scheme during certain time periods, and you must not have a break of 5 years or more from a public service pension scheme.
  • Most members will not see any increase in their pension. This is because under the new rules, your pension grows at a higher rate. Any increase due will likely be small.

 

Will the changes apply to me?

You can use our handy underpin checker below to see if these changes affect you.

McCloud and Underpin Check

We've created a helpful tool for you to see if you qualify for the underpin and the amendments as a result of the McCloud Ruling. Simply answer each question by clicking 'Yes' or 'No' to see if you're eligible.

  1. Were you paying into the LGPS or another public service pension scheme before 1 April 2012?

  2. Were you paying into the LGPS in the remedy period (1 April 2015 to 31 March 2022)?

  3. Were you under 65 in some or all of the remedy period (1 April 2015 to 31 March 2022)?

  4. Have you had a disqualifying gap? (5+ years when you were not paying into the LGPS or any other public service pension scheme)

  5. The pension you build up after the gap won't be protected. Pension you build up between 1 April 2015 and 31 March 2022 before the gap will be protected if it is kept separate.

  6. We will work out if the pension you build up in the remedy period would have been higher in the final salary scheme. If it would have been, your pension will increase.

  7. When you take your pension, we will work out if the pension you built up in the remedy period would have been higher in the final salary scheme. If it would have been, your pension will increase.

  8. You are protected by the underpin. Have you already taken your LGPS pension?

  9. You are not affected

Disclaimer - This tool is not intended to cover every personal circumstance, nor does it confer any contractual or statuatory rights and is provided for information purposes only. In the event of any dispute over your pension benefits the appropriate legislation will prevail.

What happens next?

How these changes impact you and what happens next depends on your status.

  • When you take your pension, we will do the "Underpin" check and compare the pension you built up between 1 April 2015 to 31 March 2022, with the pension you would have built had the pension rules not changed. We will provide provisional figures which will give an indication of whether your pension will increase. We will work out the final figures when you take your pension.

    An estimate will also be provided in your annual pension statement from 2025.

  • When you take your pension, we will do the "Underpin" check and compare the pension you built up between 1 April 2015 to 31 March 2022, with the pension you would have built had the pension rules not changed. We will provide provisional figures which will give an indication of whether your pension will increase. We will work out the final figures when you take your pension.

    An estimate will also be provided in your annual pension statement from 2025.

  • We will review your pension. If you are protected and due an increase, we will contact you before 1 April 2024 to confirm this. Once the increase has then been calculated it will be paid in arrears with interest.

What do I need to do?

Nothing, you do not need to do anything.

If you have already retired, and you qualify for protection, we will automatically perform the “underpin” check and apply any increase to your pension. This would also be back-dated to the date you left.

If you are still working, or you have left but you are not receiving your pension, when you come to retire or take your pension, we will perform the underpin check at this time.

Please be aware that there are some companies actively encouraging members to make an employment tribunal claim. You do not need to do this. These claims could be costly and are unnecessary because, if you’ve been affected you automatically benefit from any protection that’s provided. You also risk sharing any benefits you would automatically receive with a third party.

  • McCloud FAQs

    • Is the underpin more likely to affect certain members?

      Most members will not see an increase in their pension because the pension they build up in the CARE scheme (current rules) is better than the pension they would have built up in the final salary scheme (old rules).

      The underpin is more likely to mean an increase to your pension if:

      • your pension is adjusted because you are taking it early and your State Pension age is older than 65
      • you have a significant pay rise later in your career
      • you transfer protected pension benefits to the LGPS from another public service pension scheme and your new pay is higher than the pay you were on when you left the other scheme.

      Even if one or more of these applies to you, there is no guarantee that the underpin will mean an increase to your pension.

    • When will the Fund check that my pension is correct?

      There are thousands of records to check and we are still awaiting some guidance from the Government on how to treat certain circumstances. We may also need more information if you have been a member of more than one LGPS fund and/or you have protected benefits in more than one public service scheme (e.g. NHS, Teachers, Police) before we can work out what you are entitled to. 

      For those whose pension is already in payment, you should be contacted before April 2024 if you are due an increase.

      For anyone coming up to retirement or who is planning to take their pension, your underpin protection will be calculated when we process your retirement/payment. 

    • What is taken into account when reviewing my pension?

      Once we have identified if you are eligible for underpin protection, we will need to calculate whether or not your pension would have been higher under the old rules. When performing this calculation the Fund will take the following into account: 

      • Only pension built up in the remedy period – 1 April 2015 to 31 March 2022 – will be looked at. The underpin check will compare the benefits built up during this time versus the pension that would have been built up under the old rules. 
      • When doing the underpin check, only normal pension built up during the remedy period is considered. This is to ensure a fair comparison. The underpin check does not take into include any extra pension or reductions, including:
        • additional pension contributions such as AVCs and APCs to buy extra pension, or added years. However, APCs to buy lost pension due to absence from work will be included
        • extra pension your employer paid for
        • pension transfers from a scheme that’s not a public sector scheme
        • pension debits, or schème pays debits
        • Reduced contributions paid because you chose to join the 50/50 section. The underpin check will be based on the pension you would have built up in the main section of the scheme (e.g. paying full normal contribution rates).

    • Do the changes affect me if I qualified for the original underpin protection?

      If you qualified for underpin protection when you took your pension before 1 October 2023, you may still be affected. We will work out if you are due an addition to your existing pension under the new rules. We will do this as soon as we can after 1 October 2023.

    • Are the benefits paid to my family after I die affected?

      Underpin protection may affect the benefits paid to your dependants after you die. It could increase:

      • deferred member death grant
      • pensioner member death grant
      • pension paid to your partner
      • pension paid to your eligible child.

      The protection will also apply if a protected member died before the rules changed on 1 October 2023. We will be reviewing death grants that have already been paid and pensions being paid to partners and eligible children. Any extra payments that are due because of the underpin protection will be paid, with interest.

    • What happens in cases of divorce?

      Your pension is often taken into account during a divorce or dissolution of a civil partnership. As part of any settlement or agreement, a proportion of your pension can be allocated to your former spouse/partner.

      If you are protected by the underpin and get divorced, then the underpin check will be completed when we calculate the value of your pension benefits. If the pension built up between 1 April 2015 and 31 March 2022 would have been higher under the old rules, your pension is increased. If your pension is shared, part of this increase will be passed to your former partner.

      If you have already gotten divorced, and a pension sharing order is in place, then should you qualify for underpin protection, your pension and the pension sharing order will be reviewed. As above, if it turns out that your pension would have been higher in the old rules, then your pension, and consequently the pension sharing order, will increase. Any pensions that are already in payment, including a pension credit given to an ex-partner, will increase. Pension payments will be paid in arrears with interest.

The Scottish LGPS members website has more information on McCloud including videos, FAQs and scenarios to help you understand more about these changes.

Find out more

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