Futures made equal
The McCloud remedy is designed to give younger members the same protections awarded to older members several years ago.
Video: McCloud Explained (01:31)
What was the judgment?
After reforming public service pension schemes in 2014 and 2015, the Government introduced transitional protections for older members. However, in December 2018, the Court of Appeal ruled that younger members of the judicial and firefighters’ pension schemes had been unlawfully discriminated against because the protections did not apply to them.
This ruling is called the ‘McCloud judgment’. As a result of the ruling, changes have been made to the LGPS to remove the age discrimination. These changes are known as the ‘McCloud remedy’.
How did the protection work in the LGPS?
In 2014, the LGPS changed from a final salary scheme to a career average scheme. Older members who were closer to retirement were protected from these changes. Members were protected if they met these conditions:
- born before 1 April 1957
- joined the LGPS before 1 April 2012 (or another public service pension scheme)
- under age 65 and an active member between 1 April 2014 and 31 March 2022
- took their pension straight away when they left the LGPS.
When a protected member retired, their pension fund compared the career average pension they built up before age 65 with the pension they would have built up in the final salary scheme. If the final salary pension was higher, the difference was added to their pension. This protection is called the underpin.
There were problems with the underpin. The ‘old’ rules did not guarantee that all protected members got a pension at least as good as they would have got under the final salary scheme.
The McCloud court case
The courts ruled that younger members of the firefighters’ and judges’ pension schemes had been discriminated against because the protections for older members did not apply to them. This ruling is known as the McCloud judgment after a member of the Judges’ Pension Scheme involved in the case.
The Government committed to changing all public service pension schemes, including the LGPS, to remove the discrimination. These changes are known as the McCloud remedy.
Changes to the LGPS
The LGPS rules changed from 1 October 2023 because of the McCloud remedy. The changes are backdated to 1 April 2014, when the career average scheme started. If you qualify for underpin protection, you will be protected even if you have already left the LGPS or taken your pension.
The McCloud remedy means two main changes for LGPS members:
- Qualifying younger members are now protected by the underpin too. This removes the discrimination found in the McCloud judgment.
- The new underpin rules are much more detailed. This means that the underpin works fairly and consistently for all protected members. If you were protected by the ‘old’ underpin rules when you took your pension before 1 October 2023, your pension might increase under the ‘new’ rules.
The new underpin rules are very complex and will affect a large number of members. Your pension fund must review all the pensions it is paying to work out which ones will increase. Although these changes came into force from 1 October 2023, it will take your pension fund some time to review all the pensions it is paying.
Am I affected?
Not all LGPS members are affected by the McCloud remedy. You can use the Am I affected? tool to find out if you are affected. The basic rules are also set out below.
You will not be affected by the McCloud remedy if:
- you turned 65 before 1 April 2014
- you left the LGPS before 1 April 2014.
Your LGPS pension is protected by the McCloud remedy if:
- you were a member of the LGPS or another public service pension scheme before 1 April 2012
- you were a member of the LGPS in the remedy period between 1 April 2014 and 31 March 2022
- you were under age 65 in the remedy period, and
- you have not had a disqualifying gap.
Underpin protection only applies to pensions built up in the remedy period (1 April 2014 to 31 March 2022). The protection stopped earlier if you left the Scheme or reached your final salary normal retirement age (usually 65) before 31 March 2022.
There’s no underpin protection from 1 April 2022 onwards. Pensions built up after this date are based on the career average scheme only.
IMPORTANT: Your pension fund will look at your pension record to find out if you are protected by the underpin. If you were a member of another public service pension scheme before 1 April 2012, your pension fund may not know. Your pension fund will ask you to let them know about any relevant pension scheme membership. It is important that you give them the information they need so that you get the protection you are entitled to.
What does this mean for me?
Underpin protection works in different ways for different members. Visit the What happens if…? page for detailed information about how different members will be affected.
You can also see examples of how different members are affected.