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

Background

Under the Public Sector Equality Duty (“PSED”), the government is required to have due regard to the need to: 

• eliminate unlawful discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010; 

• advance equality of opportunity between people who share a protected characteristic and people who do not share it, and 

• foster good relations between people who share a protected characteristic and people who do not share it 

The protected characteristics which should be considered are: 

• age 

• disability 

• sex 

• gender reassignment 

• marriage or civil partnership 

• pregnancy and maternity 

• race 

• religion or belief 

• sexual orientation 

The government has access to up-to-date data on the age and sex of LGPS members, but not complete or up-to-date data on the other protected characteristics. Outlined below are the PSED considerations arising from the data the government does have, but respondents to this consultation are encouraged to share any evidence they may have on the potential impact of the proposals on any of the above protected characteristics. 

Survivor benefits and death grants 

The proposals on survivor benefits and death grants in section 1 are particularly focussed on ensuring there is no discrimination in the LGPS regarding entitlement to survivor benefits. This section outlines the government’s approach to PSED considerations regarding the proposals.  

The proposal to equalise pension entitlement is intended to ensure there is no discrimination on the basis of sex or sexual orientation when pension entitlement is calculated. The equalisation (where there is a difference in entitlement due to sex or sexual orientation) is intended to uplift the pension entitlement of survivors to the highest entitlement currently provided to any group of survivors. As the proposals are only intended to uplift the entitlement, the government does not consider that this would have any adverse impacts on other members, both generally or on the basis of protected characteristics. 

The proposal to remove the nomination requirement for cohabitees is intended to ensure there is no discrimination against members in cohabiting relationships and is put forward in light of the Brewster (2017) ruling. The decision to not backdate the change in the case of the 2011 Regulations is not viewed by government to be discriminatory, as payments under those regulations are discretionary, not an entitlement. 

The proposal to remove the age 75 cap on death grants is intended to align the LGPS Regulations with Normal and State Pension Age changes, and underlying HMT legislation. The intention of backdating the change to all deaths of eligible members on or after 1 April 2014 is to align the LGPS with the underlying HMT legislation in a manner consistent with the LGPS NI and other public sector pension schemes. 

The proposal to change death grant rules regarding personal representatives is not seen to apply to any specific group of people, as defined by protected characteristics.  

Gender Pension Gap 

The proposals on the Gender Pension Gap are about improving pension access for women members, and so the protected characteristic of sex is clearly relevant.  

The proposal to make unpaid leave under 30 days automatically pensionable will apply equally to any member, regardless of their gender (and indeed any other protected characteristic), but as in ‘Chapter 2 – Authorised absences under 31 days’, it is mostly women who take such unpaid leave in the scheme. The government considers this proposal to have a positive impact, in that members will have small gaps in their pension accrual filled in, but recognises that for the member this will mean having to make employee contributions for any such gaps, compared to making no contributions and accruing no pension. 

The proposal to change how the cost of unpaid leave over 30 days is calculated, when the member has made an election within the time-limit, will have both positive and negative equality impacts. As in ‘Chapter 2 – Cost of buying back pension lost in an unpaid break of over 30 days’, GAD has performed analysis of the proposal and the impacts according to the protected characteristics of sex and age, but has not been able to do the same for other protected characteristics where data is not available. This analysis shows that the proposal will make the cost of buying back cheaper for older members and for women, which means that it will be more expensive for younger members and men. As the government understands that most unpaid leave is taken by women, this is considered to be a reasonable trade-off to make, to address a disproportionately low level of buying back unpaid leave, and permitted positive action under section 158 of the Equality Act 2010.  

The proposal to make additional maternity leave, adoption leave and shared parental leave without pay fully pensionable only has positive PSED impacts on individual members, as it will improve pension provision and does not make pension provision worse or more expensive for any member. As shared parental leave and adoption leave (which do not have to be taken by a woman) are included, this change would benefit both men and women.  

The proposal for gender pension gap reporting does not directly impact individual members’ benefits and so there are no PSED considerations to highlight here, although reporting may highlight areas for future work. 

Opt-outs 

The proposal for opt-out reporting does not directly impact individual members’ benefits and so there are no PSED considerations to highlight here, although reporting may highlight areas for future work to support members to remain in the scheme. 

Forfeiture 

The proposal to remove the requirement that a member must have left employment because of the offence for forfeiture to be possible will have direct impact on some individual members. These proposals mean, there are instances where a member may now come in scope of forfeiture where they would not have done previously. The government considers this to be a consequence of the member’s actions - committing a relevant offence - which are unrelated to their protected characteristics. The other proposals for forfeiture do not have direct impact on members, and are about making the progress easier for employers to navigate. 

McCloud remedy 

The McCloud remedy addresses previous discrimination in the scheme on the protected characteristic of age. PSED analysis was conducted as part of the LGPS remedy1.  

The proposals within this document are intended to make sure the remedy is operating correctly in all circumstances. As such, the government considers that these proposals should only have positive PSED impacts, in that they extend the remedy. 

Other regulation changes 

The proposals on written directions, Combined County Authorities, Welsh Corporate Joint Committees and eExiting eEmployers do not have direct impact on members, and there are no PSED impacts identified. 

The proposals on de-minimis payments before 2008, AVCs and transfers and pre-2014 AVCs do have a direct impact on members, and are about extending choices available to members. The government does not hold data on the protected characteristics of members who would be affected (such as members who left the scheme before 2008 with a small pension, or those who hold AVCs and are thinking about transferring out their main LGPS benefits), but because the proposals extend member choice, the government believe there can only be positive PSED impacts. 

The proposals on the Lifetime Allowance are to reflect wider changes in the tax landscape. Data on the protected characteristics of LGPS members who may be affected by the changes is not held by government. The criteria for being affected by the proposal is driven by the monetary value of benefits being taken rather than any protected characteristic (£268,275 for the Lump Sum Allowance and £1,073,100 for the Lump Sum and Death Benefit Allowance), although it is fair to assume that it will generally be older members of the scheme affected who will have built up such benefits.   

The proposals on 5-year refunds will give administering authorities more flexibility over the timeframe in which refunds of contributions must be paid. Data on the protected characteristics of members who have been waiting for refunds to be paid is not held by government, because these members have typically not been paid because there are particular difficulties in locating the right person to pay. 

The proposals to amend the 1995 and 1997 Regulations regarding children’s pensions have a direct impact on members on the basis of age. The government considers that the basis of the amendment of the Regulations (to avoid unauthorised payments) justifies the changes being proposed. 

The government does not consider the proposals to remove all references to the European Union to have any PSED impacts.