The McCloud Judgment and NHS Pension Scheme Members: Where Are We Now?
Update on the McCloud Judgment for NHS Pension Scheme Members
Since the landmark McCloud judgment, significant progress has been made in addressing the discrimination within public sector pensions. Although early promises and deadlines were missed, NHS Pensions has made substantial strides in implementing the remedy, ensuring that affected members understand how these changes will impact them.
Given the complexity of the process, NHS pensions has acknowledged that some members face delays in receiving updates. Efforts are now being ramped up to ensure that all affected individuals are informed as quickly as possible. If you have not already received correspondence from NHS Pensions, you may shortly be contacted, and action may be required on your part.
What is McCloud?
In 2015, the government introduced changes to most public service pension schemes, including the NHS Pension, which excluded those members closest to retirement from the new rules. The Court of Appeal later ruled that this policy discriminated against younger members, and in response, the government has committed to removing this age discrimination in two stages.
- The first stage, completed in 2022, saw all active members transitioned to the 2015 Scheme, ensuring equal treatment across the board.
- The second stage, known as the Public Service Pension Remedy or McCloud Remedy, is designed to address the discrimination that occurred between 1 April 2015 and 31 March 2022, referred to as the “remedy period.”
Initially, this means that all pension growth made under the 2015 Scheme during the remedy period will be ‘rolled back’ and treated as if it were accrued in the 1995/2008 (legacy) scheme. At the time of retirement, members will then have the option to decide whether their pension is based on the 2015 or the legacy scheme rules, and the scheme administrator has promised to provide clear guidance on the pension entitlements under each option to help members make an informed decision.
What is a Remedial Pension Savings Statement (RPSS)?
An RPSS is an Annual Allowance statement sent to members affected by the McCloud remedy, designed to help you assess your Annual Allowance position.
The statement will cover a total of 13 years of growth, including:
- The relevant 2022/23 year
- The 7 remedy years from 1 April 2015 to 31 March 2022
- The previous 5 years to enable you to calculate carried forward Annual Allowances
Once you receive your RPSS, action may be required, as you may need to submit disclosures to HMRC using their ‘digital service’. The deadline for submitting any necessary information to HMRC is 3 months from the date of receipt of your RPSS, so once you receive your RPSS, don’t delay – action is required!
Cost Claim Back Scheme
In recognition of the discrimination that has occurred, members of schemes affected by McCloud who need to interact with HMRC’s ‘digital service’ are eligible to claim financial assistance for professional services. You can claim up to £1,000 including VAT towards the cost of accountancy services, or £500 including VAT for advice from an Independent Financial Advisor (IFA).
Contact a specialist
Public sector pensions continue to be a fast-moving, ever-evolving area, and it’s imperative to seek professional advice to ensure you are up to date with the latest developments and aware of your current reporting responsibilities to ensure nothing is missed.
IIf you have any questions regarding the McCloud Judgement, your pension and reporting requirements, please get in touch with one our specialists via the form below or contact your usual Azets advisor.