The UK Government has recently concluded its consultation on proposed reforms to the Local Government Pension Scheme (LGPS) in England and Wales through its ‘Access and Fairness’ consultation. The LGPS plays a vital role in providing financial security for millions of public service workers in old age, most of whom who have dedicated their lives to public sector work. The 2025 consultation proposals are aimed at improving fairness and accessibility across the scheme, with a particular focus on equality, integrity, efficiency and rewarding long-term public service.
Key issues under review include survivor pensions and death grants, the gender pension gap, people who opt out of the scheme, forfeiture and the McCloud remedy.
The consultation commenced on the 15 May 2025 and closed on the 7 August 2025. Stakeholders are now awaiting the Government’s response and we can hopefully expect the Government to announce the results of the consultation soon.
The Consultation
As part of the consultation's efforts to set out proposals to improve fairness in the LGPS, it includes proposed changes to survivor pensions and death grants. These changes seek to address historic discrimination, ensuring equal access to the scheme irrespective of the eligible member's sex or the family they leave behind. However, the administrative burden, particularly when identifying cases where calculations of past benefits would need to be revisited, is thought to be challenging. Hymans Robertson highlighted this in their response to the consultation stating that the “administrative impact of this undertaking will be significant”.
The proposals also aim to tackle the gender pension gap in the LGPS, focusing on improving access to scheme benefits for women. Currently, data on the difference between accrued pensions for men and women is not regularly collected in the LGPS and the Government is seeking to change this through the introduction of mandatory gender pension gap reporting. The aim is to better understand the disparity and encourage employers to consider the associated factors. Whilst the cause of gender disparities in pensions is largely systemic, the Government's view is that there are targeted actions it can take within the LGPS framework to drive progress forward and close the gap.
Another area of focus is members who opt out of the LGPS. The Government regards the scheme as a valuable benefit and is concerned about those who opt out. A Local Government Association survey of administering authorities in June 2024 showed opt out rates ranging from 3% to 40% of members, with only 35% of respondents to the survey stating that they routinely review the number of members who have opted out. As such, it is considering proposals to collect data in relation to how and why eligible employees come to make the decision to opt out.
Additionally, the consultation covers proposals related to forfeiture, which may be used to allow benefits to be removed from individuals convicted of crimes that bring the public service into disrepute. The proposals aim to improve the forfeiture process and fix existing issues within the regulations, specifically through the provision of guidance on forfeiture applications, in addition to the removal of the requirement for the member to have left employment, the 3-month time limit for an application of forfeiture to be made, and regulations around interim payment directions.
Finally, the consultation addresses the McCloud remedy, with proposals aimed at resolving issues that have emerged during the implementation of the remedy.
The McCloud judgement
For context, in 2015 the Government introduced reforms across most public service pension schemes. To protect those closest to retirement, some members were allowed to remain in their legacy schemes whilst other members were moved across to the reformed arrangements. However, in December 2018, the Court of Appeal ruled that such protections were discriminatory against younger members, and this decision has now been coined the ‘McCloud judgement’. In response to this, the Government has established the ‘McCloud remedy’.
The McCloud Remedy
The McCloud remedy aims to correct the discrimination that occurred when pension schemes reformed their benefit structure and to provide fair and equal treatment for all members going forward and ensure that the individuals affected by the issues are placed as far as possible in the tax position they would have been had the age discrimination not occurred.
Regulations related to the public service pensions remedy came into force in 2023 via The Public Service Pension Schemes (Rectification of Unlawful Discrimination) Tax Regulations 2023 No 1 and No. 2.
The most recent regulations, The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) Regulations 2025 - SI 2025/419 make provision for the offsetting and reclaiming of unauthorised payments charges previously paid by scheme administrators on behalf of their members and other miscellaneous technical changes.
Notably, chapter 5 of the Government consultation focuses on the McCloud remedy and aims to fix issues with the operation of the McCloud underpin that have only been identified now that administering authorities are working their way through remedy calculations.
Conclusion
With the consultation period now closed, the Government has indicated its intention to move forward with a new statutory instrument to implement amendments to LGPS Regulations, of course, subject to the outcome and responses to the consultation. A draft version has already been published alongside the consultation, and the Government is actively inviting feedback prior to formally laying the statutory instrument.
If you would like to discuss anything raised in this blog in more detail, please get in touch with a member of the pensions team or your usual Brodies contact.
