The Court of Appeal has given judgment in the South Tyneside case, overturning the judicial review decision made in December 2007 (see Pensions Update, January 2008).

The Administrative Court had decided that, although the Northumbria Magistrates Court Committee had never been an active employer in the LGPS (it was formed by the amalgamation of former employers), it still had liability as an "employing authority" to contribute towards the deficit in the scheme under regulation 79 of the then LGPS regulations (similar to the current Regulation 39 of the 2008 LGPS Administration Regulations).

The definition of "eligible employer" in the regulations was "a body employing an employee who is eligible to be a member". The Court of Appeal concluded that an "employing authority" for the purposes of contributions under Regulation 79 was restricted to those employers whose employees were actually contributing to the scheme (i.e. active members). In effect this means that the deficit liabilities for former scheme members pass to the current active employers in the Scheme.