McCloud remedy

Removing age discrimination from the NHS Pension Scheme.

13 October 2021

Information for employers about the McCloud remedy, how it impacts members of the NHS Pension Scheme and how employers can support staff with the changes.

The McCloud remedy removes the age discrimination that was judged to have arisen in public service pension schemes, including the NHS Pension Scheme. The discrimination resulted from allowing older members to remain in their legacy (1995 or 2008) scheme rather than being moved to the 2015 Scheme when it was introduced.

The remedy is made up of two parts:

  1. To ensure equal treatment from 1 April 2022, all active members of the NHS Pension Scheme are now in the 2015 Scheme. 
  2. To address the inequality that has already occurred, affected staff will be offered a choice about their pension benefits for the period over which the inequality occurred.

The process for making this choice will be different for members retiring before and after 1 October 2023.

Further detail about each aspect of the remedy is provided below.

All active members of the NHS Pension Scheme are now in the 2015 Scheme

The 1995 and 2008 Sections of the NHS Pension Scheme closed on 31 March 2022 and all staff that were contributing to those schemes on that date were automatically moved to the 2015 Scheme on 1 April 2022. 

Members will keep all pension that they have earned in the 1995/2008 Sections before 1 April 2022, and the calculation of these benefits will still be linked to the member’s final salary. Members can continue to access these 1995/2008 pension benefits in line with the existing rules for each section of the scheme.

Moving members to the 2015 Scheme means that many individuals will have built up pension in more than one section of the NHS Pension Scheme over their career. At retirement, pension pots are therefore likely to be made up of more than one set of benefits. Each section of the scheme has different rules about how pension benefits from that section are calculated and when they can be claimed.

Employers should communicate with affected staff and offer reassurances where needed that pension already built up will not be lost. The three key messages to communicate are set out in our resource for employers, along with facts that can be used to address the common myths associated with each message. We would encourage employers to share this information with relevant colleagues to ensure that messages given to staff are consistent and correct.

Employers can signpost staff to further information about moving to the 2015 Scheme on the dedicated NHS Pensions web page.

Affected staff will be offered a choice about their pension benefits for the remedy period

Staff that will have retired before 1 October 2023 will make a retrospective choice.

To address the discrimination that has already occurred, affected members will be asked to make a choice about whether they would like to receive 1995/2008 Section benefits or 2015 Scheme benefits for the period between 1 April 2015 to 31 March 2022. This is the period over which members were treated differently according to their age, and is often known as the remedy period.

Affected staff that have already retired, or who are planning to retire shortly, should do so according to the existing rules and their pension will start to be paid based on their current membership situation. This is because the legislation that is needed to be able to offer members their choice before they retire is not expected to be in place until 1 October 2023.

Once the relevant legislation is in place, NHS Pensions will contact these members directly and offer them a retrospective choice, along with personalised information to help them make this choice.

If a member chooses to keep their existing benefits, no changes will be needed. If a member chooses to receive different pension benefits for the remedy period, adjustments will be made to their pension payments accordingly. Any changes will be backdated to the date of retirement.

A retrospective choice will also be offered to members that have taken ill health retirement and to the families of members that have died during the remedy period.

Employers can signpost staff that wish to retire before 1 October 2023 to the dedicated NHS Pensions web page for further information.

Affected staff that will retire after 1 October 2023 will make their choice at retirement.

Staff retiring after 1 October 2023 will be offered the same choice of receiving either 1995/2008 Section or 2015 Scheme benefits for the remedy period. However, by this date the legislation is expected to be in place for members to be offered their choice as part of the normal retirement process, before any pension payments have been made.

NHS Pensions will provide personalised information setting out the two options to help members make the best decision for their individual circumstances.

Employers can signpost staff that will retire after 1 October 2023 to the dedicated NHS Pensions web page for further information.

Resources for employers

The following resources have been produced to help employers to understand the McCloud remedy and to support staff with the changes:

  • In 2015, the government introduced reforms to most public service pension schemes, which included the 2015 NHS Pension Scheme. Members that were closest to retirement at the time were protected from moving to the reformed schemes, and could therefore remain in their legacy schemes. In the NHS, the legacy schemes refer to the 1995 and the 2008 Sections of the scheme. Members with full protection did not have to move to the 2015 Scheme at all, and members with tapered protection were permitted to remain in their legacy scheme for longer, with their move to the reformed scheme delayed beyond 1 April 2015.

    In December 2018, the Court of Appeal found these protections to be discriminatory against younger members. This has become known as the ‘McCloud judgment’.

    The government has now begun implementing a remedy to remove this discrimination and ensure equal treatment going forward.

  • Employees who joined the NHS Pension Scheme on or before 31 March 2012 and who were still members of the scheme on 1 April 2015 are eligible for the remedy, regardless of whether they previously received full, tapered or no protection.

    This includes current members of staff, those that have already retired or no longer work for the NHS and those that have passed away. Staff that joined the scheme on after 1 April 2012 are not affected.

    Employers can signpost staff to the dedicated NHS Pensions web page and decision tree (pdf) to help them understand if they are affected.

  • After 1 April 2022, staff with Special Class or Mental Health Officer status are able to take any pension earned in the 1995 Section of the scheme without reduction from age 55, providing that they continue to meet the eligibility criteria.

    Access to an unreduced 1995 Section pension at age 55 does not necessarily mean that an individual has to stop working, and many may wish to continue beyond this age. We would encourage employers to be promoting flexible retirement arrangements with these members of staff, to support them to work beyond age 55 in a way that suits their plans and benefits your organisation.

  • For the majority of scheme members, the remedy will not have an impact on their pension tax position.

    However, some members will be required to reassess their pension tax position for the seven year remedy period, particularly in relation to the annual allowance. due to a change in the value of their benefits over this period. As a result of this reassessment, a member may have overpaid or underpaid pension tax charges.

    If a scheme member has underpaid tax, the individual will need to pay HMRC what is owed, with scheme pays being available to do this. Where a scheme member has overpaid tax, HMRC will pay a refund direct to the individual or adjust any scheme pays arrangement, as appropriate.

    This will create additional complexity for scheme members and employers, although the specific details for dealing with pension tax are still being considered. We will keep employers updated as further details are published by HM Treasury and HMRC.

  • Download our response on behalf of employers.