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

Regulation 12 of the LGPS (Amendment) (No 3) Regulations 2023 (‘the 2023 Regulations’) – Divorce or dissolution of civil partnership before 1st October 2023 – says that for members who were divorced (or dissolved a civil partnership) before 1st October 2023, any additional pension they receive from the underpin (estimated or in payment), must be split with their ex-spouse, in accordance with any pension sharing order. 

The issue of a pension sharing order results in a pension credit (the amount the ex-spouse or former civil partner receives) and a pension debit (the amount taken from the member to go to the ex-spouse or former civil partner). Regulations 12(5) and 12(6) however only refer to the pension credit, and not to any pension debit. The government is proposing to amend Regulation 12 so that it can now apply to both a pension credit and debit. This will ensure that a pension sharing order can be implemented in respect of LGPS benefits. 

In cases where the pension sharing order sets a fixed amount, instead of a percentage, the appropriate amount is the lesser of the fixed amount or the cash equivalent of the relevant benefits. Where the appropriate amount is the fixed amount, it is not proposed that administering authorities need to revisit pension debits. Where the appropriate amount is the cash equivalent, the proposal is that administering authorities do need to revisit pension debits, as it is possible that the cash equivalent may now be above the fixed amount, if the member has for example received a significant top-up from the McCloud remedy.  

We also believe that the member’s pension needs to be recalculated in instances where that pension was a tier 3 pension that was suspended before 1 October 2023, where the member trivially commuted the pension before 1 October 2023, and where the member died before 1 October 2023. 

The government’s view is that where member pensions are recalculated using a recalculated pension debit, this applies to related benefits of survivor pensions, trivial commutation lump sums, deferred/pensioner death grants, transfers out and interfund adjustments. If an overpayment is created by the recalculated pension debit, it is expected that administering authorities will make reasonable efforts to recover the overpayment, as they would any other overpayment.  

The proposal amends Regulation 12 to give effect to these scenarios.