LGPS Employer Briefing note
Exit payment reform proposals
15 Oct 2020 - Estimated reading time: 10 mins
We summarise the exit payment reform proposals currently being consulted on, which will affect LGPS members of employers taking early retirement for redundancy/business efficiency reasons.
Reforms may significantly reduce the value of exit packages for members (not just high earners) who are made redundant from age 55. Employees will face difficult choices between pension and cash. There is much uncertainty about the timing, member communications and practical processes of these.
What actions do employers need to take?
Any employers that are considering early retirement and redundancy exercises should consider these impending reforms. Some of these changes, regarding the “£95k cap”, are expected to come into force in early November.
Who is affected?
This is relevant for the following types of employer in the Local Government Pension Scheme in England & Wales: Councils, Police and Fire Authorities, Academies and some Colleges. We do not expect Admission Bodies to be affected by this, and it is uncertain at the moment whether or how Scottish employers will be affected.
If you have any questions or require further support please get in touch.