On Friday 12 February, HM Treasury announced that the Restriction of Public Sector Exit Payments Legislation has been revoked with immediate effect, due to ‘unforeseen consequences’ of the legislation. The Treasury guidance this can be found on their website. As a consequence of the Treasury announcement the following applies to the Fund and employers:
- for exits from 12 February 2021, LGPS administering authorities must pay qualifying scheme members an unreduced pension under regulation 30(7) of the LGPS 2013 regulations. Scheme employers will be required to pay full strain costs in relation to those unreduced benefits, as notified by their administering authority. Employers should not make cash alternative payments to either the scheme member or the administering authority
- the guidance sets out HM Treasury’s expectation that employers should pay the additional sums that would be paid had the cap not applied for employees who left between 4 November 2020 and 12 February 2021
To further assist employers the Local Government Association (LGA) have published a document which sets out the information for employers on the position for redundancy and business efficiency exits now that the cap has been disapplied. It applies to exist of LGPS members who are 55 and over.
- Exit cap employer information note (external link to a PDF document)