Neil Buxton, Technical Specialist Pensions Fund Policy and Governance presented this report, focussing on the major changes to the exit cap which would see any member of the LGPS aged 55 or older retiring on an employer sponsored basis (ie for reasons of redundancy or efficiency of the service), being impacted by proposals to prevent the payment of severance in addition to a pension strain cost. This was a big change for the administration system providers who were not technologically ready for this change. This meant that the administration team would be involved in manual adjustments and any quotes for early retirement could not be honoured. The proposals were out for consultation but there was no anticipation of any changes.
Sarah Duxbury, Assistant Director Governance and Policy, added that there was a further consultation expected on the proposals due to the potential disconnect between the cap regulations and the LGPS regulations (eg application of the cap could result in a breach of the pensions regulations). Clearly it was not satisfactory for administrators to be in a position whether either the pensions regulations or the cap regulations had to be breached.
In response to questions on timescale for implementation, Sarah Duxbury recommended that a watchful eye needed to be kept on the situation and that opportunities to engage in the consultation be taken up. The Chair asked that the Committee be afforded sight of the further consultation response.
That the Committee notes and comments on the report.