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The McCloud judgement guide

by Medics Money

What is the McCloud judgement and its impact on the NHS pension

The McCloud judgement centres all around the way in which the 2015 schemes were introduced and affects all of the public sector pension schemes although the biggest impact is the NHS Pension Scheme. There is now a planned rectification of benefits accruing to NHS pension members as a result of the McCloud judgement. This is often referred to as the McCloud Remedy.

Medics Money will be releasing various documents as part of our McCloud Remedy pages. The first of these is an explanation as to who is impacted.

Is your NHS pension impacted by the McCloud Remedy?

Members impacted have two things to consider. The first is that they have to have been a member of the scheme as of April 2012. The second thing is how close they were to their normal pension age. If they had less than 10 years to their normal pension age at 1 April 2015 they didn’t move into the 2015 section and they stayed in their old part of the pension scheme (known as the Legacy Sections). If they had more than 13 and a half years to their normal pension age then they were moved across into the 2015 section as of 1 April 2015 automatically, it was a mandatory move.

If they were in that middle group that had between 10 and 13 ½  years to their normal pension age, they would have moved, but they would have had a choice as to when, which could have either been the 1st of April 2015 or a later date that was based on their date of birth.

Can I claim NHS Pension compensation for McCloud advice and costs?

If the move to the 2015 scheme led to a financial cost to you then we understand compensation will be available. Whether that is to cover the cost of recalculating ting annual allowance charges, recouping advice costs taken for previous decisions etc we currently do not know.

Click here to learn who and who to claim up to £1,000 compensation.

https://www.medicsmoney.co.uk/mccloud-compensation-payout-should-i-consult-an-advisor/

The legal challenge

If you were somebody who was moved across into the 2015 section and you were also a member of the NHS Pension Schemes at April 2012, then your service is going to get rolled back. It will be as if you didn’t join the 2015 section up until the 31st of March 2022.

Everybody  in this legacy group is then being treated as having joined the 2015 section from 1 April 2022. When you then retire and take your benefits, you will then get two sets of figures that will give you two options. The first option is that you continue in your original section until the 31 March 2022 and the second option is that you continue in that section only until the 31 March 2015 from which point you join the 2015 scheme.

 

The way we envisage it working is that people will look at those two sets of figures and then choose whichever one is the most beneficial for their circumstances. It is worth emphasising that this will be on retirement although if you have already retired then that exercise will commence in the Autum of 2023 with choice figures being given to retired members.

The fundamental thing is that no one should be worse off as a result of the remedy, which is a great position to start from.

Considerations

As information comes available we will then release further documents covering;

  1. Annual allowance pension tax charges – as part of the remedy process annual allowance tax charges will be reviewed for all tax years from 2015/16 to 2021/2022 with a Remidial Pension Savings Statement being issued. NHS members will need to act on these. For more information on this please see here

  2. If you have bought additional benefits –ERRBO or additional pension in the 2015 scheme then this will be converted to the further benefits in the legacy scheme you were in.

  3. If you opted out of the scheme or ceased buying added years as a result of being moved to the 2015 scheme then a light touch regime is to apply to allow you to consider buying back those missing years – although its worth pointing out that this will result in you paying missing contributions. For more information on this see here.

  4. The government have indicated that compensation will be considered in a case by case basis. We await further information on this and will update our Compensation and advice needed page when available.

What to do now?

Get prepared. Get access to your Total Rewards or My NHS Pension Statement. 

Our pensions guide shows you how to get this information – download it here

Act on letters received. Once they start coming out then there is only a small timeframe to act especially if you need your Annual Allowance tax charge  correcting or wish to buy back pension you had previously opted out on.

If you are looking to contact an advisor to assist you with navigating this period then we have added a new option on our Contact an Advisor page to specifically deal with McCloud.

For more information on the McCloud judgement, please click here.