The McCloud Remedy for NHS Pension Members

The Remediable Pension Savings Statement (RPSS) relates to the McCloud Remedy, which is the method by which the Government is addressing the pension changes brought about by the McCloud legal judgement issued a few years ago, which particularly affects higher earners. The McCloud Remedy requires that members of the NHS Pension scheme for the tax years from April 2015 to April 2022 (7 years) are reassessed in terms of both pension growth (the increase in the value of your pension rights) and the tax liabilities that may have arisen as a result.

NHS: Costs claim-back scheme

The Government has agreed a ‘cost claim back scheme’ to enable those affected to reclaim the professional costs in resolving the two key areas – a check on whether a refund or tax liability has arisen and that the current assessed value of their pension is correct.

For an accountancy tax position check, the fee compensation is capped by the government at £1,000 (inc. VAT), and for work carried out by an IFA, the limit is £500 (inc. VAT).

The HMRC portal is complex and involves a considerable amount of time and work, but Azets have a dedicated team who can support and have already made a large number of McCloud submissions on behalf of clients to HMRC, with the full amount of costs reimbursed for the fees incurred.

In addition, we have our own trusted IFA business, Azets Wealth Management and can advise on both the tax position and pensions aspect.

The McCloud Judgement refers to a 2018 Court of Appeal ruling which found that transitional protections introduced during the 2014 and 2015 public service pension reforms were discriminatory.

These protections applied only to older members, meaning younger members, such as those in the judicial and firefighters’ pension schemes, were treated unfairly. The judgement is named after one of the claimants, a member of the Judicial Pension Scheme.

As a result, the government is required to make changes across all affected public service pension schemes, including the NHS and LGPS, to remove this age discrimination.

The McCloud Remedy is the government’s response to correct the age discrimination identified in the McCloud Judgement. It affects NHS Pension Scheme members and other public sector workers who were moved to the 2015 scheme.

There are two main parts:

From 1 April 2022, all active members moved to the 2015 scheme.
Members will be able to choose whether they receive legacy or 2015 scheme benefits for the period from 1 April 2015 to 31 March 2022 (known as the remedy period).

Most people will make this choice when they retire. If you’ve already retired or will do so before the new process is in place, NHS Pensions will contact you directly and provide a personalised Remediable Pension Savings Statement (RPSS) to help you decide.

The McCloud remedy affects NHS pension scheme members who:

Were in service before 31 March 2012 and on or after 1 April 2015
Have taken pension benefits and retired since 1 April 2015
Are deferred members returning within five years

The Government is issuing Remedial Pension Savings Statements (RPSS) to help individuals assess their Annual Allowance position.

Once you receive your RPSS, you may need to take action. If it shows that you’ve exceeded your Annual Allowance in any relevant year, you’ll likely be required to submit disclosures to HMRC via their online digital service, using a professional accountant.

If you think you are affected and would like us to kickstart your tax review, please contact one of our specialist advisors.

Remember, you only have 3 months from the date you receive your RPSS to submit any required information to HMRC.

It might be the case that your pension record is not fully up to date. If this is the situation, then it may not have been possible for you to obtain an accurate Total Reward Statement (TRS), and as a result you may not receive a RPSS from NHS Pensions.

If you have any queries or would like support in dealing with the McCloud Remedy, please get in touch.

Contact a specialist

Navigating public sector pension changes requires up-to-date knowledge and expert guidance. At Azets, our team of medical sector specialists can:

Confirm whether you’re eligible for a tax refund
Handle the submission process to HMRC on your behalf
Reclaim the cost of our support via the Government reimbursement scheme

For broader financial advice, our sister company, Azets Wealth Management, offers:

Expert support on understanding the NHS pension scheme
Personalised retirement and financial planning
Advice on how to make the most financially beneficial decisions, including those related to the McCloud Remedy

To kickstart your McCloud Remedy tax refund claim, or if you have any question in relation to your position, please complete the form below.

What action you need to take

To support those affected by the McCloud Remedy, the Government is issuing Remedial Pension Savings Statements (RPSS) to help individuals assess their Annual Allowance position.

You only have 3 months from the date you receive your RPSS to submit any required information to HMRC.

These allowances apply per piece of advice - meaning you can claim additional costs if further work is needed (e.g., due to a data error from NHS Pensions).

If the transition to the 2015 NHS Pension Scheme resulted in a financial cost to you - such as higher tax charges or the need for professional advice - it is expected that compensation will be available under the McCloud remedy. This may include reimbursement for costs like recalculating annual allowance tax charges or reclaiming fees paid for financial advice related to the pension changes. However, the full details of what will be covered and how to claim compensation have not yet been confirmed.

The McCloud judgment affects NHS pensions in two main ways:

Pension benefits: Pension built up in the 2015 scheme during the affected 7-year period will be moved back to your legacy scheme (1995 or 2008). At retirement, you’ll choose whether to keep the legacy benefits or receive them as if they were in the 2015 scheme.
Annual allowance tax charges: If you were affected by annual allowance charges - particularly as a consultant or GP - these will need to be recalculated and resubmitted to HMRC. NHSBSA provides the necessary information for NHS annual allowances.

The McCloud judgment does not change your retirement age - it’s still your decision when to retire. However, it does affect how your NHS pension is calculated by changing which scheme your pension benefits are built up in during the remedy period.

Why does this matter? Each NHS Pension Scheme section has a different Normal Retirement Age (NRA):

1995 section – age 60
2008 section – age 65
2015 scheme – linked to your State Pension age

If you retire before the NRA of any section, early retirement reductions may apply. Each section also has different rules for how pension benefits build up.

The McCloud remedy may roll your 2015 scheme benefits back into the 1995 or 2008 section, potentially allowing more of your pension to be taken at age 60 without reduction. While it doesn’t grant automatic early retirement, it may influence your retirement plans based on how your final benefits are calculated.

Contact one of our specialists direct.

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