Some 18,000 teachers have been made retrospectively eligible for Local Government Pension Scheme benefits by the implementation of the McCloud remedy, presenting an “administratively challenging” task for both the Teachers’ Pension Scheme and LGPS-administering authorities, according to the Local Government Pensions Committee.
The issue concerns the remedy period, which ran from April 1 2015 to March 31 2022, and was brought about by the passage of the Public Service Pensions and Judicial Offices Act 2022, which defined “remediable service” to include “excess teacher service”, incurred by those in part-time employment post-2015 who also hold full-time contracts.
The part-time portion of the service was not pensionable in the legacy TPS final salary scheme, though the teachers in question would have been eligible to join the LGPS where their employer offered it.
“This is because the LGPS regulations provide for membership if a person is employed by a scheme employer and is not entitled to membership of another public service pension scheme in respect of that employment,” the LGPC explained in a bulletin.
This exercise is going to be administratively challenging for both the TPS and LGPS-administering authorities
LGPC
Excess service complications
The TPS legacy scheme closed to all pension build-up from April 1 2022. The 2015 reforms introduced a career average revalued earnings component to the TPS, in which both full and part-time employments were pensionable. Post April 1, all subsequent benefits are built up in the reformed scheme.
This meant that teachers in the reformed scheme were not eligible to join the LGPS in respect of their part-time employment, unlike members in the legacy scheme.
However, in line with the terms of the McCloud remedy, all eligible members in the reformed scheme were “rolled back” into the legacy scheme for the duration of the remedy period, and members — at the point they come to take pension payments — are subject to the deferred choice underpin, deciding whether to take legacy or reformed scheme benefits.
The exception is for those who had already taken pension benefits, who must be given an immediate choice “as soon as possible” after October 1 2023.
Complications arise, however, for those with part-time excess teacher service, because this employment goes from being pensionable under the TPS Care scheme to the LGPS for the remedy period.
Following the remedy period, for teachers who remain in (or restart) employment after March 31, the chance will be given to transfer membership from the LGPS back to the TPS.
“Where a teacher keeps their excess teacher service in the LGPS and subsequently makes their choice on whether to have reformed or legacy scheme benefits for their main TPS record, this decision will not affect their LGPS membership for the remedy period. The LGPS will remain the member’s appropriate scheme for their excess teacher service for the remedy period,” the LGPC explained.
An ‘administratively challenging’ task
The committee said that the Department for Education has estimated 18,000 teachers are in scope, and these will be a mix of active, deferred and pensioner members.
For pensioner members who were not given the transitional protection originally, or who were only afforded partial protection, TPS affords an immediate choice between final salary or Care scheme benefits for the remedy period.
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Those who choose legacy benefits will see their excess teacher service made retrospectively pensionable in the LGPS, which will not only have to be made payable immediately, but also allow for adjustments in the case of over or underpayment.
“This exercise is going to be administratively challenging for both the TPS and LGPS-administering authorities,” the LGPC warned.
The committee said it would work with the DfE and the Department for Levelling Up, Housing and Communities on how to identify affected members, adjust employee and employer contributions, obtain data for LGPS records, deal with additional pension contracts, make adjustments to benefits already in payment, and handle transfers back to the TPS after the remedy period.
