The fund, which serves over 150 participating employers from 12 Scots councils such as Glasgow City Council and North Lanarkshire Council to staff on public bodies such as Scottish Water , Scottish Police Authority and Scottish Fire and Rescue Service has admitted the breach to the Pensions Regulator.
The Herald has previously revealed how the Pensions Ombudsman is examining numerous complaints as the nation faces a £1.7 billion bill in public pensions age discrimination scandal that has locked out thousands of retired people from their full nest eggs for years.
The crisis began with a UK High Court judgment in 2018 which found that 2015 public sector pension reforms, introduced to cut costs as people lived longer, unfairly discriminated against younger workers.
The so-called McCloud ruling triggered moves in Scotland to send statements to over 200,000 public sector staff from police and firefighters to teachers and nurses who had suffered the age discrimination which includes details of potential arrears dating back to 2015.
Concerns have also been raised with First Minister John Swinney, with calls for action and “heads to roll” over Scottish Public Pensions Agency’s failures to make amends over lost pension cash to thousands of workers including police, nurses, firefighters and local government staff which has seen some die before they got their remedy statements.
It has emerged that the Strathclyde Pension Fund, overseen by the SNP controlled Glasgow City Council has now admitted a law breach of “material significance” to the Pension Regulator during 2024/25.
The breach arose after administrators failed to include legally required information about the so-called McCloud remedy — compensation for unlawful age discrimination — in annual benefit statements that should have been issued to members by August 31 2024.
The omission meant that the fund did not comply with regulations designed to protect the rights of both pensioners and those due to retire.
The Scottish Government then ran a consultation and changed the regulations which would quash any possibility of any breaches in local government pension funds. The new rules – which came into force in February this year were backdated to October 1, 2023 – and removed the requirement to include the information in the 2024 statements.
The Herald understands that because change, the breach was cancelled out.
It is understood that some 65,000 people that may be affected should have been told that the remedy would effectively cancel out the effects of the discrimination present between 2015 and 2022.
And it is understood that at least 400 so far need to have their pensions revised where their value would rise. It was expected that they would be processed by next month.
Retired police superintendent Martin Gallagher, who heads a Job’s Forgotten group of over 500 members to co-ordinate issues for those who are fighting to get their pension remedies, said: “Changing the law after the breach shows what a whole mess pension reform has been.”
Martin Gallagher who leads the Jobs Forgotten group of over 500 pensioners fighting for their retirement rights (Image: Martin Gallagher)
Local government work differently from other public sector schemes. They are funded — meaning money put in is invested — and when someone retires, the fund managers automatically check which version of their pension is worth more: the one under the old rules or the newer ones. The pension is then supposed to be automatically topped up to the higher amount.
By contrast, most other public sector pensions overseen by the SPPA — like those for teachers, police, firefighters and NHS staff — are not invested, meaning they are paid directly from government money rather than investments.
For these, people often need to be given information and then choose which pension arrangement works best for them.
But for the local government scheme pensioners and those coming up to retirement, the need to know what is being done and how it could change their retirement income so that they can track that administrators are doing what is best for them and take action if they are not.
One pensions expert said: “If the statement does not include the McCloud remedy the member does not know whether all the years they’ve worked are being fairly counted under the correct rules – or if they could be owed extra pension because of the court-ordered changes.
“Benefits statements should include that information as members have a right to transparency and accuracy about their benefits. It’s also important for financial planning — people use these statements to decide when to retire, how much they can afford to save, or whether to buy extra pension. “Missing information keeps members in the dark about something that could be worth thousands of pounds to them.”
Mr Gallagher added: “It is very odd that the [invested] schemes are looking after their members and simply putting them on the best path while the unfunded ones like ours are leaving their members to make important decisions while providing no financial advice whatsoever.”
Glasgow City Chambers (Image: Newsquest)
A Glasgow City Council spokesman said that the fund had eventually provided the necessary McCloud remedy details this year by a new deadline of August 31.
“The age discrimination was embedded in the pensions legislation made by the coalition government back in 2015, rather than being the result of steps taken by Strathclyde or any other fund.
“It’s a huge administrative task.
“The fund is working through the relatively small number of historic adjustments that need to be made to benefits.
“However, we have to recognise that this is a constantly moving picture – as changes, including to salaries, can have a retrospective effect, meaning that records need to be continually reassessed.”
The schemes involved taking council workers, teachers, NHS staff, police and firefighters away from “gold-plated” pensions which were based on the final salary at or near retirement. So if a worker had 30 years of service and retired with a final salary of £40,000, the pension would end up being a fixed percentage of that – for example 1/60 of salary for every year worked, which would amount to £20,000 a year.
But the replacement CARE or Career Average Revalued Earnings schemes were based on typical earnings over a worker’s whole career, which in many would be mean getting less.
The changes would also mean that people would have to retire later and was usually linked to the State Pension age.
So people forced into the new scheme lost out – and that is why the courts ruled it unfair that older workers were protected but younger ones were not.
The switch from old to new pension scheme took council workers, teachers, NHS staff, police and firefighters away from what some consider was “gold-plated” pensions based on the final salary at or near retirement.
The replacement CARE or Career Average Revalued Earnings schemes were based on typical earnings over a worker’s whole career, which for many would mean getting less.
The spokesman said it was generally accepted that the old local government final salary scheme “heavily favoured” those who had experienced salary ‘spikes’ later in their careers, perhaps associated with promotion.
But he said that generally speaking, the newer scheme was more generous to those at lower grades where “the majority of local government employees sit”.
The Pensions Regulator, which has legal powers to investigate, issue fines, demand information, replace trustees, and in serious cases, prosecute individuals or organisations that break pension laws, could not confirm or deny if any enforcement action has been taken.