Answer:
The courts’ judgments in the McCloud and Sargeant litigation meant that there was uncertainty as to the value of members’ benefits. As a result, the government announced in 2019 that the cost control element of the 2016 valuation process would be paused.
While the government recognises the uncertainty this caused for members, it was right to pause the mechanism at this time as the litigation made it impossible to properly assess the value of member benefits at the 2016 valuation process.
The government worked with stakeholders to develop proposals to remedy the discrimination identified by the courts in the McCloud and Sargeant litigation and launched a consultation on these proposals in July 2020. The publication of the consultation meant that uncertainty about scheme benefits had reduced. Alongside the consultation, they announced that the Cost Control Mechanism would be un-paused, and the 2016 valuations completed.
HM Treasury has engaged closely with stakeholders to ensure the Amending Directions support schemes to accurately reflect changes to the value of member benefits because of the McCloud remedy. Drafts of the Amending Directions were shared with schemes and Scheme Advisory Boards to allow feedback and provide them with the opportunity to make any necessary updates to their 2016 valuation data and assumptions.
By publishing these Amending Directions schemes are now able to finalise the results of the 2016 valuations and provide certainty to scheme members.