In 2015, the UK government introduced major reforms to most public service pension schemes, including the NHS pension scheme. These reforms aimed to make pensions more sustainable and affordable for the future. However, one key aspect of the changes sparked legal challenges; age-based protections that were granted to older members, but not to younger ones.
This led to what’s now known as the McCloud Remedy, a term that originates from a landmark Court of Appeal ruling in 2018. The case concluded that the transitional protections given to older members were discriminatory towards younger public service workers.
As a result, the government was required to rectify this inequality. The McCloud Remedy is the government’s way of fixing this issue and ensuring fairness across all members, regardless of age.
Who is Affected by the McCloud Remedy?
The McCloud Remedy may impact you if you meet all the following criteria:
- You joined a public service pension scheme on or before 31 March 2012.
- You were still a member of the scheme on or after 1 April 2015.
- If you left the scheme after 31 March 2012 but returned within five years, you may also be affected.
These conditions apply to members across various public sectors, including NHS workers, teachers, civil servants, and others in similar pension schemes.
If you are a Myers-Clark client and we believe the McCloud Remedy affects you, we have already contacted you directly via letter. However, if you have any questions, please email your normal manager.
What Does the McCloud Remedy Mean for You?
The remedy could significantly impact your pension and tax positions. During the “remedy period” (which spans from 1 April 2015 to 31 March 2022), affected members may have:
- Overpaid pension tax charges and therefore may be entitled to a refund.
- Been placed in a less favourable pension scheme, potentially impacting future benefits.
To resolve this, the government is allowing affected members to choose which scheme benefits (either legacy schemes like the 1995/2008 scheme or the newer 2015 scheme) they want to apply for the remedy period. This choice will be made at the point of retirement.
As of 1 April 2022, all members will accrue future pension benefits in the 2015 scheme, regardless of previous protections. However, any benefits earned under the old schemes up to that point will remain intact.
What Should You Do?
If you’re affected by the McCloud Remedy, it’s important to understand your position and consider your options carefully.
At Myers Clark, we’re here to help. Our team has already undertaken the necessary training and guidance to assist clients with the McCloud Remedy process. If we believe you’re affected, we’ve already reached out to you. However, if you’re unsure or have recently returned to service, please don’t hesitate to contact us.
We’ll need some basic information to proceed, such as your pension statements and service history. However, rest assured that we’ll handle the bulk of the work on your behalf, including the complex calculations and submission of forms.
Can You Handle The McCloud Claim Yourself?
Yes, you can. HM Revenue & Customs (HMRC) has developed an online digital tool to help individuals manage their remedy position independently. However, the process can be complex, especially when calculating historic pension tax charges or determining which scheme offers better benefits. There may be technical questions along the way, and errors can have financial consequences.
This is where professional advice makes a difference.
And there’s good news, the NHS Cost Claim Back service allows you to reclaim up to £1,000 in professional accountancy costs related to the McCloud Remedy. This means you can benefit from expert support without bearing the full cost yourself.
How Myers Clark Can Help
Our team at Myers Clark is experienced in navigating the complexities of the McCloud Remedy. We’ve already supported many clients in assessing their remedy period, understanding their rights, and submitting the correct information to the relevant authorities.
If you believe you may be affected or simply want peace of mind that your pension records are accurate and fair, we encourage you to get in touch.
For more information or assistance, please get in touch with Steffanie Tiffen at Steffanie.Tiffen@myersclark.co.uk
Final Thoughts
The McCloud Remedy represents a significant shift in public service pensions. While the goal is fairness, the process can be intricate. Don’t leave your pension future to chance get the right advice, understand your entitlements, and ensure you’re in the best possible position for retirement.
Let us help you navigate this change with clarity and confidence.