To understand how McCloud affects those of us with NHS Pensions, we need a brief pensions history lesson. In June 2010 the government asked Lord Hutton to review public sector pension schemes like the NHS Pension. Lord Hutton’s recommendations ultimately led to the creation of a new section of the NHS Pension (and other public sector pensions) This new 2015 section had a retirement age linked to state retirement age and was based on Care Average Earnings (CARE). The problem was the government decided that those within 10 years of pensions age should not be affected by the reforms. This was successfully challenged in court on the grounds of age discrimination by firefighters (Sargeant) and Judges (McCloud) In order to rectify this age discrimination, the McCloud remedy was devised.
Who is eligible for the McCloud remedy? Is my NHS Pension affected by McCloud?
Were you a member of the NHS pension scheme as of 31 March 2012?
Did you have your pension record moved into the 2015 pension scheme anytime between 1 April 2015 and 31 March 2022 (known as the remedy period)?
If you answered yes to both of these then you are impacted by the McCloud judgment and remedy.
Read on but keep coming back to revisit these pages as we add more information or sign up here to receive an email as and when we think you need to know something.
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/
How will the McCloud judgement affect my pension?
There are two impacts:
- On your pension – the pension you accrued in 2015 scheme for that 7-year period will be rolled back into your legacy pension scheme (1995 or 2008 scheme). On retirement you will then be given a choice as to stay with this rollback or opt for the pension to be paid out as if it was in the 2015 scheme for those 7 years. No one should be worse off than they were originally, and many will be better off.
- On your annual allowance tax charge – many clinicians in the NHS pension scheme were never impacted by the annual allowance tax charge – a charge on “excessive” growth in your NHS pension. If so, then there is probably nothing for you to do. However, if you were or you were a consultant or GP over that period then the impact of the McCloud rollback is that all these calculations need updating and resubmitting to HMRC. The good news is that it’s going to be done as a single exercise and we hope NHSBSA will be able to meet the deadline of providing information to do this by 6 October 2024. It also impacts on the annual allowance process for 22-2. See here for information.
What does the McCloud remedy mean?
The remedy is simply putting you back to where you were for the 7 years from 2015 to 2022. All pension service will automatically be rolled back.
Does the McCloud judgement mean I can retire at 60?
For more details on the Judgement click here.
McCloud doesn’t change your retirement date – that’s up to you. It does though impact how much pension is built up in the different sections of the scheme. Why does that matter? One major factor is the Normal Retirement Age – that’s 60 in the 1995 section, 65 in the 2008 section and state pension age in the 2015 section. Retiring before these ages in each section results in early retirement factors applying which reduce the pension that would be paid. Each section also builds up benefits in different ways.
The McCloud remedy will though impact your pension calculation and in some cases may mean you change your plans on when to retire.
Will I be better off after McCloud Judgement?
No one should be worse off as you will be given the option to choose which pension is higher – the one you had built up or the one which accounts for the rollback into the old schemes. In some cases, though staying in the 2015 scheme will give them a better pension for that 7-year remedy period. However, there is no need to choose now what to do.
How does McCloud remedy affect hospital doctors including NHS Consultants?
In the 1995 and 2008 sections of the scheme hospital doctors have a final salary link to the pension. In the 2015 section it’s based on career average earnings. Which is better will very much depend on how your salary grows between now and retirement as well as the length of service. For now, though the rollback will put people back into the final salary scheme for that period which could in many cases reduce Annual Allowance charges that have occurred.
If you opted out of the scheme or changed any additional benefits plans you had you may also be able to take action to remedy this decision – see here for more information.
How does McCloud remedy affect GPs?
In all three sections GPs are on a career average earnings calculation although your pre-GP period of service is calculated differently for each section. McCloud will impact the section the benefit is built up in and also the Annual Allowance calculation. In some cases, the tax charge may be higher though so watch out and take action if you receive a Remedial Pension Savings Statement.
If you opted out of the scheme or changed an additional benefits plans you had you may also be able to take action to remedy this decision, take a look here.
How does McCloud remedy affect other NHS staff like nurses?
McCloud covers all NHS staff if you were part of the eligible group. If you are not impacted by the Annual Allowance tax, then you don’t need to worry about that. Your pension will automatically be rolled back, and your pension forecast will change. No action is needed but of course everyone should monitor their pension as it’s a valuable investment.
If you want to understand your pension better, then download our free pension guide.
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How do I claim back pensions tax under McCloud remedy?
This will be through an HMRC portal but the data can only be submitted once you have received a Remedial Pension Savings Statement, take a look here.
Remedial statements will firstly come out to members who have already received their pension and then to non-retired members from midway through 2024.
Where can I find a McCloud NHS Pension expert for advice?
It will depend on what advice you need as not all advisors will be able to cover off every part of this complicated change. Medics Money is run by doctors so it’s not us! But we work with the very best specialist accountants and independent financial advisors. See one of the links at the top of this page.
What was the McCloud Judgement ruling?
If you are interested in the background of how we came to where we are today, please see here.
What is the McCloud remedy for 2023?
Our pages give you all the information you need – but if you need more contact us via the Get in Touch link above
What is the McCloud remedy legislation?
If you are interested in the background of how we came to where we are today, please see here.
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