Kingston upon Thames Pension Fund faces significant delays in implementing the McCloud Remedy, a complex process requiring the recalculation of pensions for approximately 3,483 members.
The Kingston upon Thames Pension Fund Panel was informed that industry-wide software delays have prevented the inclusion of individual underpin calculations in annual benefit statements, impacting the implementation of the McCloud Remedy. Tom Taylor, Head of Pensions Administration, explained that while annual benefit statements were issued on time to active and deferred members, the McCloud Remedy calculations could not be included due to these software issues.
A breach of law has been reported to The Pensions Regulator (tPR) concerning the McCloud Remedy, as individual underpin calculations could not be included in the initial annual benefit statements (ABS) due to these industry-wide software delays. Because the initial statements were not fully McCloud-compliant, a regulatory breach has occurred. In line with strict governance requirements, this breach has been formally reported to tPR. The potential consequence is that The Pensions Regulator could impose fines of up to £50,000.
An updated project plan now targets completion by January 2027, with an anticipated earlier completion by Christmas. This revised timeline aims for Phase 4: Member Communication & Payment
and Phase 5: Project Closure
to be completed by January 2027. Key milestones include System Implementation & Testing
by October 2026 and Benefit Recalculation & Review
by December 2026. Officers are working diligently to deliver against this updated plan as software functionality becomes available.
The McCloud Remedy requires the Fund to review service histories back to 2014 to ensure members receive the higher benefit between old and new scheme rules. This involves recalculating pensions for approximately 3,483 members and rectifying benefits for pensioners already in payment. The delay is attributed to the complexity of the Local Government Pension Scheme (LGPS) regulations and the reliance on software providers to deliver necessary updates. The reasons for the software provider's inability to deliver updates are due to the complex nature of the LGPS Regulations and the historical data requirements
and significant issues within the software release(s)
that prevent the system from performing accurate McCloud calculations.
This is an industry-wide issue affecting a large number of public sector pension funds, who are collectively pressing their software providers to deliver the essential system upgrades.
The delay in including underpin calculations will affect members' understanding of their current pension benefits and their overall financial planning. The projected figures for in-scope members will not yet include any additional underpin amounts. Upon project completion, each member will receive further communications explaining the impact on their pension benefits, if any. Revised, fully McCloud-compliant statements will be re-issued to all affected members.
Beyond issuing annual benefit statements on time, the Kingston upon Thames Pension Fund is taking several steps to mitigate the impact of these delays. Officers are prioritising cases for members with unprocessed leaver processes, targeting completion within the next quarter. For pensioners in payment, benefits will be rectified back to 2014, with payments, including interest, anticipated to be delivered in November's payroll. Officers will also support employers with implementing new pensionable pay definitions and compulsory contributions for short periods of unpaid leave. An updated communications plan is in place, and a newsletter has been issued to all 3,483 in-scope members informing them of the delay and providing a revised timeline.
While awaiting software updates, the Fund is continuing to use a standalone calculator for immediate retirement and death cases to ensure compliance for new events. However, the Fund's position remains that accurate individual underpin figures cannot be provided until the wider McCloud rectification project is complete. In assessing regulatory risks, officers decided that ensuring all members received a statement by the 31 August statutory deadline was the lower-risk option, accepting that projected figures would not yet include additional underpin amounts.
Increased administrative costs due to delays and project extensions are a consequence of the Missing or Poor Historical Data
risk and Administration System Software Delays
risk for the Access & Fairness project. The meeting information can be found in the Public reports pack Wednesday 23-Sep-2026 10.00 Pension Fund Panel.