As a reminder, the McCloud Remedy was implemented to remove age discrimination across public sector pension schemes. In 2015, the Government introduced reforms to most public service pension schemes, including the NHS Pension Scheme.
Some scheme members that were close to retirement at the time were protected from moving to the new 2015 scheme and could therefore remain in their existing schemes. However, The Court of Appeal found these protections to be discriminatory against younger members and have since implemented the McCloud Remedy to remove the age discrimination.
All active members of the NHS Pension Scheme are now in the 2015 scheme.
Rollback on Annual Allowance
If you are impacted by the McCloud Remedy, you will receive pension benefits via the legacy scheme (in the NHS, this is the 1995 or 2008 scheme) or the 2015 reformed scheme for your membership between 1 April 2015 and 31 March 2022. This period is called the remedy period.
As of 1 October 2023, any pensionable service you have during the remedy period will be placed in your legacy scheme for annual allowance purposes. This is called rollback.
NOTE: Depending on when you retire, you will still have the option to revert your pension benefits back to the 2015 scheme for the remedy period.
Many members affected by rollback will not see any change to their pension tax position, but some may, particularly if they had an annual allowance charge for one or more of the remedy period tax years.
Therefore, NHS pensions are due to provide a ‘Super’ Pension Savings Statement that will show each members Pension Input Amounts (PIAs) reverting from the 2015 scheme back to either the 1995 or the 2008 Scheme.
If you are affected by rollback, you should receive your ‘Super’ Pension Savings Statement by HMRC’s extended deadline of 6 October 2024.
The NHS Cost Claim Back Scheme
Further to the above changes, NHS Pensions have announced that they are opening the ‘NHS Cost Claim Back Scheme’ to compensate NHS pension scheme members who have suffered a financial or tax loss due to the discrimination.
In addition, NHS Pensions will compensate up to £500 including VAT to support members to obtain financial advice where they have a complex McCloud choice. The McCloud choice is the decision members will need to make when they take their NHS pension benefits, as noted above.
NHS Pensions will also compensate members up to £1,000 including VAT for support with the McCloud Annual Allowance Rollback Assessment. This is where a member will need to reassess their annual allowance tax position because of the NHS pension benefits accrued between April 2015 and April 2022 being rolled back into the 1995/2008 scheme on 1 October 2023.
If you would like to discuss your position in further detail, please feel free to get in touch with your usual Healthcare contact.
