Proposed Changes to the Local Government Pension Scheme (Scotland)

Recently the Brodies pension team reported on the UK Government’s Access and Fairness’ consultation on proposed reforms to the Local Government Pension Scheme (LGPS) in England and Wales. Now, it appears that the Scottish Ministers have followed suit, with its consultation for proposed changes to the Scottish LGPS.

The consultation’s purpose is to gather stakeholder views on proposed amendments to the LGPS (Scotland) Regulations 2018 (the “2018 Regulations”) with the overarching aim being to bring the Scottish scheme in line with the position across the rest of the UK. In addition to this, the consultation also proposes changes to the amend the LGPS (Transitional Provisions and Savings) (Scotland) Regulations 2014 (the “2014 Regulations”) and the LGPS (Remediable Service) (Scotland) Regulations 2023 (the “2023 Regulations”).

Launched on the 2 September 2025, the Scottish Government’s consultation welcomes views on the proposals to help shape a fairer and more accessible LGPS in Scotland to modernise the scheme in line with the broader legislative developments.

The Consultation

The consultation covers a wide range of key proposals, many of which, as expected, are similar to the proposed reforms across the border, including removal of the 75 age limit for death benefit payments, gender pension gap reporting, forfeiture and the McCloud remedy. However, the consultation also covers several points specific to the Scottish LGPS, including the transfer of Scottish Fire and Rescue Staff to the Strathclyde Pension Fund and the inclusion of neonatal care leave within the definition of child related leave.

Removal of the Death Grant Age Limit

Among the proposals, include an amendment to the 2018 Regulations to remove the age restriction on eligibility for death grant payments and an amendment to the 2014 Regulations to disapply the 75 age limit on death grants for individuals who died on or after 6 April 2011 and legacy scheme rules continue to apply.

For context, in the LGPS Scotland, beneficiaries of eligible members may be paid a lump sum following the death of the member, a death grant, in order to ensure that beneficiaries receive a minimum payment regardless of the timing of the relevant members death. However, in recent years, the rise in state pension age has unintentionally excluded some beneficiaries from such death grant. The proposed changes by the Scottish Government aim to resolve this issue and align the scheme with the Finance Act 2004, which originally imposed the same restriction, but later repealed the limit through the Finance Act 2011.

Gender Pension Gap

Another area of focus of the consultation is addressing the gender pension gap within the LGPS Scotland, as the Scottish Government recognise that women typically accrue a lower pension compared to their male counterparts. And as part of the proposals, the Scottish Government propose mandatory collection and reporting of participation and opt-out data to better understand the reason behind member decisions for non-participation and opting out, particularly as the scheme is viewed as a very valuable benefit.

The consultation also suggests extending the timeframe for members buying back any lost pension during authorised unpaid absences from the current 30-day period to one year, or until the member leaves that employer. This change aims to improve pension continuity, particularly for those on maternity or adoption leave, which often leads to significant gaps in pensionable service. Importantly, the proposals also suggest making the final 26 weeks of maternity leave automatically pensionable. As it stands, a woman who takes the full 52 weeks maternity leave is entitled under law to 26 weeks full pay, which is pensionable and 13 weeks additional leave, some of which is pensionable and a further 13 weeks additional leave, which is not pensionable. To help close the gaps in pensionable service, the Scottish Government proposes redefining child-related leave in the regulations to cover all additional periods of maternity, adoption and shared parental leave where pay is reduced or not provided, aligning pension accrual with modern times.

Forfeiture

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. In particular, the Scottish Government are looking to remove the current three-month time limit for an employer to make a forfeiture application. The current 3-month timeframe imposes a far stricter deadline than other public service pension schemes, where no such restriction exist, and in practice, the tight turnaround time has in some instances prevented forfeiture where it was appropriate. The removal of this limit would bring the LGPS in Scotland in alignment with wider public sector standards.

McCloud Remedy

This consultation also proposes further technical McCloud related changes to the LGPS regulations. For background, 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 remedy aims to correct the discrimination that occurred when pension schemes reformed their benefit structure and seeks to provide fair and equal treatment for all members going forward, ensuring that the individuals affected by the issues are placed as far as possible in the tax position that they would have been had the age discrimination not occurred. The intention is to address issues with the operation of the McCloud underpin that have only been identified now that administering authorities are working their way through remedy calculations.

The consultation period has been ongoing for the past 12 weeks and officially closes on the 25 November 2025. We soon await the publication of the responses and look forward to engaging with the outcomes in due course.

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.