7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• Government response to LGPS consultation published
• Select Committees publish Government response following the Taylor Review
• Burgess and others vs BIC UK Limited: overpayments and limitation periods

Government response to LGPS consultation published

On 19 April 2018, the MHCLG (formerly, DCLG) published the response to its 2016 consultation on proposed amendments to the LGPS.
The proposed amendments included:

• introducing “Fair Deal” to the LGPS. The Fair Deal sets out how pensions issues are to be dealt with when staff are compulsorily transferred from the public sector to independent providers delivering public services. It was proposed that “LGPS Fair Deal” regulations replaced existing pensions protection for local authority employees upon compulsory transfer
• a range of other amendments, including proposals to give members greater flexibility in how they use their AVCs.

The response document confirms that the Government has decided against introducing the “Fair Deal” draft regulations which were consulted upon in May 2016, as they “would not be in the best interests of LGPS administering authorities, members or employers”. However, it states that the Government remains “committed to introducing Fair Deal into the LGPS” and that it intends to commence a consultation on “new proposals for achieving Fair Deal in the LGPS” by the end of 2018.

The remaining amendments are being taken forward, with some revisions and omissions (including that of the AVC proposal), through The Local Government Pension Scheme (Amendment) Regulations 2018. These regulations come into force on 14 May 2018, and amend the Local Government Pension Scheme (LGPS) Regulations 2013 and the LGPS (Transitional Provisions, Savings and Amendment) Regulations 2014.

Select Committees publish Government response following the Taylor Review

The Work and Pensions and BEIS Committees have published the Government’s response to their joint report on a framework for modern employment.

In November 2017, the Committees published a joint report and draft Bill aimed at closing “the loopholes that allow companies to use bogus “self-employment” status as a route to cheap labour and tax avoidance”. The joint report followed evidence sessions with Matthew Taylor, on his report Good Work: the Taylor Review of Modern Working Practices, and had made various recommendations for addressing the issues raised in the Taylor Review. The Government’s response to the Taylor Review was published in February 2018.

This latest response to the Committee’s joint reports addresses how suggestions raised by the Committees will be taken forward, including by undertaking further consultations on employment rights and status.

Burgess and others vs BIC UK Limited: overpayments and limitation periods

A High Court decision handed down on 17 April 2018 has discussed the application of limitation periods when recovering overpayments made by pension schemes. The judgment in the case of Burgess and others vs BIC UK Limited was predominantly concerned with a question over the effective introduction of increases in a scheme; as a side issue, however, it also required the issue of overpayment recovery to be considered.

The judge, Mr Justice Arnold, agreed with the employer’s view that recovery of overpayments applying the equitable right of recoupment (that is, offsetting past overpayments against future instalments of pension) was not restricted by the Limitation Act, holding that recoupment amounted to a future account adjustment rather than a claim for repayment of monies by a member. In doing so, the judge rejected the trustees’ argument that a six year limitation period should be applied, following Webber.

This decision does not overrule the judgment in Webber, and leaves us with two High Court decisions taking different approaches to the subject. It remains to be seen how the Pensions Ombudsman will approach overpayment cases in light of BIC.  Schemes should continue to treat overpayments on a case-by-case basis.

For further information, please speak to Sackers’ Pensions & Investment Litigation team.