Tower Hamlets Council is set to review its pension scheme's survivor benefits and opt-out rates as part of a broader effort to improve accessibility and fairness. The review comes in response to the Ministry of Housing, Communities and Local Government's (MHCLG) consultation on 'LGPS Access and Fairness' within the Local Government Pension Scheme (LGPS).
The Tower Hamlets Pension Board discussed the consultation at a meeting on Monday 30 June 2025, agreeing to delegate authority to officers to draft and submit a response by the consultation deadline of 7 August 2025. The board agreed to delegate authority to officers to draft and submit a response to the consultation, in consultation with the chair of the Pensions Committee, by the deadline of 7 August 2025. The consultation addresses several key areas, including:
- Survivor Benefits: Amendments to ensure equal treatment of survivors, regardless of the member's sex or the nature of the relationship (e.g., same-sex or opposite-sex partnerships). GAD's modelling suggests no significant change to total LGPS liabilities because of the proposals.
- Gender Pension Gap: Measures to address the gender pension gap, including reinstating automatic pension accrual for certain unpaid absences under 31 days, such as unpaid breaks which disproportionately affect female members in local government roles. The Council is likely to bear the cost of reinstating automatic accrual for increased pensionable service and liabilities relating to casual absence or carers' leave (e.g. school support staff) through future employer contributions.
- Opt-Out Rates: The MHCLG proposes mandatory data collection on members who opt out of the scheme, aiming to understand the reasons behind opt-outs, especially among low-paid or younger employees, and to develop strategies to encourage participation. The proposal would make employers report anonymised opt-out information to help inform future scheme reforms and member engagement.
- Forfeiture Rules: Clarifying and potentially reforming the rules around forfeiture, to ensure consistency and fairness across administering authorities.
- McCloud Remedy Technical Amendments: Technical changes are proposed to the implementation of the McCloud remedy, ensuring that the rectification of age discrimination in public sector pension schemes is applied consistently and effectively within the LGPS. The McCloud judgment found age discrimination in how protections were applied during the transition to the 2014/2015 pensions reforms.
The board reviewed a report on the analysis of non-scheme members as at 31 March 2025, which highlighted the reasons why some eligible employees choose not to join the pension scheme. Raju Ahmed, pensions manager, said that the economical situation hasn't been favourable when it comes to joining the pension, so some people are reserved in terms of joining the pension scheme.
To address this, Mr Ahmed said that the council is trying to educate people as to the benefits of being in the pension scheme and how they make that saving. He also said that the council is trying to build an online portal where, when they do opt-out, they go through those stages of reading up articles about the benefits of being in the pension scheme, what they will get from the pension scheme, and then right at the end, they'll have the opt-out form. So before making that opt-out decision, they will be informed as to what they're losing out on.
Councillor David Stephen Thompson said that advocacy to be a member of a pension scheme needs to be in of the benefits to challenge myths, and not just to do the mechanics of how it's administered, but at the front end to describe how important it is.