£95K Exit Cap Revoked: important update

By disapplying the cap, this means the LGPS Regulations are “reintroduced” for current cases, and effectively back dates these to the 4 November 2020 (when government first introduce the exit cap). This allows the Pension Fund to pay unreduced benefits for scheme members who retired on redundancy and efficiency grounds age 55 or over in this period (4 November 2020 to 12 February 2021), with payment of the full pension strain by the employer.

It is also important to note; the decision by Government to disapply the exit cap also includes the future potential changes that were planned for 2021.

However, also on the 12 February 2021, HM Treasury issued guidance stating; It is still vital that exit payments deliver value for the taxpayer and employers should always consider whether exit payments are fair and proportionate. HM Treasury will bring forward proposals at pace to tackle unjustified exit payments.

Because further changes are expected, the Pensions Section has had to look again at this process but for the time being, the online modeller for redundancy and efficiency estimates has been reintroduced for scheme members, allowing them to run their own estimates via the Member Self-Service Benefit Projectors.