Local Government Pension Scheme in England and Wales - Access and Fairness

Gender pay gap reporting is now well-established in the UK, having been mandatory for employers with at least 250 employees since 2017. Gender pension gap reporting is not as well-established but is a growing area of interest. 

In the LGPS, information on the difference between accrued pensions of men and women is not routinely collected. The government proposes to change that by making gender pension gap reporting mandatory in the LGPS. The intent is to both gather data to understand the gap better and encourage employers to focus on what factors may be contributing to any such gaps.  

The government proposes that administering authorities would be required to report on two metrics: their fund-wide gender pension gap and their gender pension saving gap as defined below. This would be reported in the fund actuarial valuation report every three years (as well as in the annual report of that year).  

The government believes the actuarial report, and not the annual report, would be the appropriate place for reporting, because the slower movement of gender pension gaps would better align with the 3-yearly cycle of valuation reports. The actuarial valuations already consider demographic data, and so the addition of gender pension gap data is not considered to be likely to be onerous.  

The proposed implementation of this proposal is from the 2025 valuation onwards. The government recognises this timeframe may be ambitious but believes the importance of the issues necessitates fast action. As actuarial firms have already started work on the 2025 valuation, the government will continue to work with GAD, the SAB, and actuarial firms on the data that will be needed to meet the new requirements.  

The government also believes that there would be value in a more granular view of gender pension gaps at the employer level. This would help administering authorities identify employers where there are specific issues (e.g., the issue of authorised unpaid leave in the education sector given above) and to take steps to understand and tackle such gaps. However, this would be a new requirement, and for smaller employers may be less meaningful and more difficult to calculate. The government proposes that only employers with at least 100 employees would be required to report in such a way. The expectation would be that actuarial valuation report would contain the gender pension gap and savings gap for such employers. It is proposed that this would be included in the Rates and Adjustments Certificate, which already lists all employers in a fund. Administering authorities would also have the option of grouping certain types of employers to gather insights. 

The government will work with the SAB to review gender pension gaps once the reporting process has been embedded. It is recognised that the calculation of gender pension gaps will have complications, such as whether casual workers are included or not, and the government intends to work with the SAB on guidance for reporting requirements.  

The government proposes to define the gender pension gap as ‘the percentage difference in the LGPS pension income built up for male and female scheme members over a typical working life’. The government also suggests a further definition of the gender pension savings gap as ‘the percentage difference in the LGPS pension accrued annually for male and female scheme members’. These definitions are adopted from the Pension Equity Steering Group, in collaboration with the SAB.