Say Farewell to the Public Sector Exit Pay Regulations

That didn’t last long, did it? In a significant “U-turn” the government has announced that the regulations which brought in a £95,000 cap on public sector exit pay have been revoked. The regulations had first been floated many years ago and were finally introduced in November last year.

However, as the government has now stated, the regulations had a number of unintended consequences, including conflict with the local government pension scheme rules. Implementation of the rules had led to problems for many people because the cap took into account ‘pension strain’, which is the payment made by an employer to a pension fund to cover the additional costs of an employee taking early retirement. Such payments could take even a relatively junior employee over the limit.

The swift revocation of the rules will no doubt be a relief to public sector employers and employees alike and government guidance had provided for any employees affected by the short-lived regulations to be compensated.

 

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