Employers

In this section:

A pause in scheme design improvements

In our email of 24 December 2018 we informed you of proposed improvements to the design of the LGPS 2013 that were expected to take effect from April 2019. This followed a breach in the floor of the cost cap mechanism. We attached the SAB announcement which provided information on the proposed changes but emphasised specifically the proposed change to the bottom tiers of member contribution rates. This was in order that payrolls could be ready to deduct the correct level of member contributions.

Court decision

The McCloud court case may require public sector pension schemes, including the LGPS to extend protections introduced in the 2013 regulations to a wider number of members. This would make the LGPS more expensive to employers. The SAB have therefore decided to pause the cost management process. In its statement of 8 February the SAB stated that it 'remains committed to honouring the result of its cost management process once the outcome of McCloud is known.' In pausing the process it has reserved its position regarding the resubmission of the same or a revised package of benefit improvements and contribution reductions when clarity in this matter has been achieved.

As a result there are currently no changes to benefits planned in respect of the cost cap. This situation will be reviewed once McCloud is resolved which is not expected for some months.

Administering authorities and employers should therefore proceed on the assumption that the scheme will not change in April. In particular employee contributions should be collected in April on the basis of current regulations. The table of employee contribution bands and rates to be implemented with effect from 1st April 2019 under current regulations is shown below.

Contribution bandings 2019/2020
    Main scheme 50/50 section
Up to £14,401.00 5.50% 2.75%
£14,401.00 £22,500.00 5.80% 2.90%
£22,501.00 £36,500.00 6.50% 3.25%
£36,501.00 £46,200.00 6.80% 3.40%
£46,201.00 £64,600.00 8.50% 4.25%
£64,601.00 £91,500.00 9.90% 4.95%
£91,501.00 £107,700.00 10.50% 5.25%
£107,701.00 £161,500.00 11.40% 5.70%
£161,501.00 Or more 12.50% 6.25%

Actions

Administering Authorities and payrolls should ensure that member contributions are deducted in accordance with the above table from 1 April 2019. However, it is possible that once the outcome of the McCloud case is known the SAB may decide to back date scheme design improvements. We ask employers and their payrolls to be ready for any retrospective amendments. The Pensions Shared Service will keep you up to date with developments. 

Read the SAB announcement and view all of the information regarding the cost management on the SAB website.