Government Pension Developments for March 2021

The world of public service pensions in England and Wales is abuzz with recent updates, focusing primarily on the implementation of the McCloud remedy, advancements in Local Government Pension Scheme (LGPS) governance and investment reforms, and progress in employer cost cap procedures.

McCloud Remedy and LGPS Reforms

In response to the historic discrimination identified in public service pensions, particularly within the LGPS due to the McCloud case, the UK Government has been actively addressing the issue. Changes aim to improve fairness and accessibility, focusing on removing unlawful age discrimination found in the McCloud judgment. These changes include adjustments to survivor pensions, death grants, gender pension gaps, and scheme opt-outs. New statutory underpin amendments and actuarial guidance have been published, with related regulations set to come into force from October 2023 and member choices expected by March 2025.

Pension Schemes Bill 2025

On 5 June 2025, the draft Pension Schemes Bill was published, signaling structural changes to the LGPS governance and investment frameworks. The bill forms a legislative basis for reforms including accelerated asset pooling, governance enhancement, and setting local investment objectives, as proposed in the "Fit for the Future" consultation from November 2024. This will significantly reshape how the LGPS operates and is governed in the near future, though detailed regulations are yet to follow.

Exit Pay Cap and Employer Cost Cap

The government has lifted the pause on the employer cost cap process, allowing the 2016 valuation to be completed with the McCloud remedy costs factored in. While explicit details on changes to the exit pay cap are less prominent, this development hints at ongoing recalibrations of employer pension costs that include McCloud-related liabilities.

Pensions Regulator’s Code of Practice

As of August 2025, no direct details about a new Pensions Regulator code of practice have been found. However, given the ongoing legislative and regulatory activity in pension schemes, it is plausible that the Pensions Regulator is reviewing or updating its codes to align with these reforms.

Other Notable Developments

The Ministry of Justice (MoJ) has published its consultation response, confirming that judges in scope of the McCloud case will be given a choice of either old or 2015 judicial pension scheme membership in respect of the period between 1 April 2015 and 31 March 2022.
The Ministry for Housing, Communities and Local Government (MHCLG) has withdrawn its letter regarding the implementation of the Exit Payments Regulations.
MHCLG has released guidance for administering authorities on preparing and maintaining policies on review of employer contributions, employer exit payments, and deferred debt agreements.
The Restriction of Public Sector Exit Payments (Revocation) Regulations 2021 have been made, revoking the cap on exit payments introduced by The Restriction of Public Sector Exit Payments Regulations 2020.
The MoJ has published a second consultation response confirming the key features of the new judicial pension scheme to be introduced in April 2022.
The House of Commons library has updated several briefing papers, including ones on State Pensions 2021: FAQs, Pensions tax relief - the annual and lifetime allowances, Public sector exit payment cap, Personal service companies and IR35, Pre-pack administrations, and Spring Budget 2021.
MHCLG considers its September 2020 consultation on reforming local government exit pay to be closed, and there will be no further changes made to Local Government pensions or redundancy terms without a further, separate consultation.
The Pensions Ombudsman has partly upheld a complaint by a member of a private sector pension scheme in relation to his request to transfer to a QROPS, among other decisions.
HM Treasury has chosen the third option in its consultation on ensuring that public service pension scheme members continue to have their pension payments fully indexed and equalized, resulting in public service pension schemes being directed to provide full indexation to people with a Guaranteed Minimum Pension who reach State Pension age after 5 April 2021.

Sources: [1] Government consultation on LGPS reforms [2] McCloud remedy consultation summary [3] Pension Schemes Bill 2025 [4] Forestry Commission annual report [5] LGPS McCloud remedy