Partner Kate Payne comments in Pensions Expert on the High Court’s LGPS exit credit ruling
A recent High Court ruling in favour of a county council battling a contractor over £6.5m in exit credits, provides much needed clarity over regulations that have given rise to several legal disputes, according to legal experts.
Exit credits were introduced in 2018 as payments to qualifying employers in case their Local Government Pension Scheme (LGPS) came into surplus during the lifetime of a contract.
Kate Payne noted that in their initial drafting they were similar to exit payments and commented:
“A payment obligation to the private sector contractor arose if a surplus existed in the LGPS with no regard for any risk sharing that might have been agreed between contracting parties before these regulations came into force”.
“It was realised that this might give rise to windfalls for private sector contractors who had agreed that the relevant local authority had assumed the pensions risk and so a retrospective amendment was made in 2020 to give a discretion to make exit credit payments rather than an absolute obligation.”
Read Kate’s comments in Pensions Expert.
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