How the McCloud judgement could impact your NHS pension
The McCloud judgment does not change your retirement age - it will still ultimately be your decision when you retire. However, the judgement does affect how your NHS pension is calculated by allowing you to choose which scheme your pension benefits are built up in during the remedy period.
What does the McCloud judgement potentially mean for you?
As a result of the McCloud legal case, certain NHS pension scheme members will have their pension benefits reassessed. If you are affected, you will be given a choice over how your pension is calculated for the remedy period (1 April 2015 to 31 March 2022):
- Under the 2015 scheme, or
- Under one of the legacy schemes — the 1995 or 2008 sections.
Who is affected?
If you were you a member of the NHS pension scheme as of 31 March 2012 and you had your pension record moved into the 2015 pension scheme anytime between 1 April 2015 and 31 March 2022, you are impacted.
Understanding the different NHS pension schemes
There are different sections of the NHS Pensions Scheme and each section has different rules for how pensions benefits build up. If you retire/have retired before the normal retirement age (NRA) of any section, reductions may apply.
- 1995 section: NRA of 60
- 2008 section: NRA rises to 65
- 2015 scheme (latest version): NRA is linked to your state pension age. This is based on career average revalued earnings rather than final salary.
Key difference: The 1995 scheme entitles a member to three times their annual pension as a tax-free lump sum. This is not the case for the 2008 and 2015 scheme.
Reviewing your NHS pension benefits
Each year, NHS pension scheme members receive an annual reward statement, providing a breakdown of pensions benefits accrued. The benefit for many members will be made up of at least two sections of the scheme and this will be indicated on the statement.
Furthermore, as highlighted in our recent article on delays to RPPS being sent out, once you receive your Remediable Pension Savings Statements (RPSS), review it carefully to ensure you understand the McCloud recalculated figures.
To assist, you can use HMRC’s online calculator to determine if you need to adjust your tax position if you have been affected by the McCloud Remedy.
Contact a specialist
If you need help understanding your pension position, please get in touch with our Medical sector specialists. Additionally, if you have any questions in relation to a McCloud Remedy claim, we are here support you.
