Insights / News
Insights / News
A number of LGPS member authorities had observed that some employees were opting out of the LGPS on the basis of their religious belief, particularly people of the Muslim faith who were concerned that LGPS funds/investments were not Sharia-compliant. At present there is no alternative pension provision from these employers other than the LGPS.
The board therefore commissioned a report and asked Lydia to advise on the risk of a successful claim for discrimination or human rights challenge from an employee complaining of a failure by an LGPS employer to provide a Sharia-compliant scheme.
Lydia’s advice is available at the link below, and includes the following points:
The Board’s report explained: “At a high level, her advice is that at present it is arguable whether employers have the legal power to offer an alternative to the LGPS. If that were to be clarified as permissible, offering alternative pension provision could most likely not be limited just to Muslim employees who opt out of the LGPS by reason of their religious beliefs.” Lydia had advised that any alternative provision (which would probably be a [defined contribution] scheme offering inferior benefits to the LGPS) would need to be offered to all employees.
It said there would be “obvious implications for employers and administering authorities of offering and administering more than one scheme”, as well as the possibility of employees opting out of the LGPS other than for religious reasons, for example to join a cheaper scheme but with lesser benefits.
It is believed that neither the LGPS nor any other defined benefits scheme has so far faced a such claim.
Bob Holloway, pensions secretary to the LGPS advisory board, told LGC the board agreed the secretariat should “seek further expert advice on those elements of the counsel’s advice that, in the board’s view, require further clarification”.
The full Advice – Sharia Compliant Investments in the Local Government Pension Scheme in England & Wales – is available here: https://lgpsboard.org/images/PDF/BoardMar2022/Sharia07032022.pdf
Lydia Seymour has a specialist pensions and employment law practice. She has been recognised by the legal directories as a leading junior since 2005 and is listed for employment, pensions and professional negligence. She has substantial experience of statutory schemes and advises regularly on issues relating to the Local Government Pension Scheme, the Teachers’ Pension Scheme, University Superannuation Scheme and the NHS Pension Scheme.