Last year the Department of Health and Social Care (DHSC) published their consultation response and regulations to support the first phase of the Public Service Pension Remedy (McCloud Remedy) which:
- closed the legacy public service pension schemes on 31 March 2022
- ensured equal treatment for all public service pension scheme members by moving all active members into the reformed public service pension schemes on 1 April 2022
On 8 September, DHSC published the second part of the consultation response to the regulations to introduce the remedy: McCloud remedy part 2: proposed changes to NHS Pension Scheme Regulations 2023 - consultation response - GOV.UK (www.gov.uk)
The second and retrospective part of the remedy will remove the effect of the transitional protections.
For NHS Pension Scheme members affected by McCloud, the second part of the remedy will:
- return members who moved to the 2015 scheme back into the legacy scheme for their pensionable service (the ‘remediable service’) affected by the discrimination during the remedy period, from 1 April 2015 to 31 March 2022, which is referred to as ‘rollback’
- offer a choice of whether to receive legacy scheme benefits or equivalent 2015 scheme benefits for their remediable service, both of which are payable from the legacy scheme
Rollback
Rollback is going ahead as planned in time for the legislative deadline of 1 October. Members with continuous service during the remedy period, which is from 1 April 2015 until 31 March 2022, will be automatically moved back into their legacy scheme. In the NHS this is the 1995/2008 Scheme.
We have had processes in place internally to ensure that any applications before 1 October have been processed with the correct service.
We've added more information to our website on three elements of the remedy linked to rollback.
Remediable Service Statements
Members who are affected by the Public Service Pension Remedy, will receive their first remediable service statement by April 2025. The statement will show two sets of figures showing the value of their pension benefits to date with their membership for the remedy period (1 April 2015 – 31 March 2022) in the 1995/2008 Scheme, or in the 2015 Scheme.
Each year, members will receive an updated remediable service statement as part of their annual benefit statement to help keep them informed ahead of the choice they’ll make when they retire between 1995/2008 Scheme and 2015 Scheme remedy period benefits.
As a result of the significant number of records being rolled back in October, and work to prioritise development of remediable service statements, it will not be possible for us to undertake a mid-year refresh of annual benefit statements this year. We'll be sharing messaging on this with members via our communication channels shortly, as well as more information on remediable service statements and what these will include.
All members retiring from April 2024 will be provided with the information as part of their retirement application process to enable them to make their choice of remedy period benefits on retirement. Therefore, any members retiring before the first remediable service statements are issued will still receive this information.
You can find more information on our website about when members will be able to make a choice on retirement www.nhsbsa.nhs.uk/changes-public-service-pensions/when-youll-make-your-decision-about-your-nhs-pension-benefits
Contingent decisions
A contingent decision is a decision a member made or didn’t make because of (actual or perceived) implications of the 2015 Scheme reforms. A member may have acted differently if they knew they would be remaining in the 1995/2008 Scheme for the remedy period.
We’re working on putting in place the processes needed to support this and once we can we’ll contact affected members directly about the following contingent decisions:
Further information about contingent decisions, as well as the impact of McCloud on transfers, divorce and ill health retirement benefits will be available soon on our website via the Changes to public service pensions hub.
Members affected by annual allowance
Many members affected by rollback will not see any change to their pension tax position. However, members who paid an annual allowance charge for one or more tax years in the remedy period may see a change to their pension tax position.
The HMRC Digital Service:
HMRC is introducing a new digital service that will enable members who have new annual allowance charges or changes to annual allowance charges, because of rollback to:
-
reassess any previous annual allowance charges during the remedy period tax years
-
make an application for a refund of any previously overpaid annual allowance charges for tax years, 2019/20, 2020/21, 2021/22
-
make an application to claim compensation for any previously overpaid annual allowance charges for tax years 2015/16 to 2018/19
-
pay any underpaid annual allowance charges for tax years 2019/20, 2020/21, 2021/22
The HMRC Digital Service will also apply to other tax charges such as lifetime allowance charges and unauthorised payments charges.
To use the digital service, members will need to have updated pension savings statements for the remedy period, which will provide them with the updated pension input amount or growth in pension for each year of the remedy period.
We’re recalculating the pension input amounts for members affected by rollback and annual allowance charges for each remedy period tax year, and 2022/23. Once this is complete, we’ll send affected members an updated pension savings statement, also known as a ‘remediable pension savings statement.’
Further information about the HMRC Digital Service will be available on our website soon via the Changes to public service pensions | NHSBSA.
Updated ‘pension savings statements’ for the remedy period:
If a member is affected by rollback and annual allowance charges, we’ll send them a remediable pension savings statement for the tax years in the remedy period.
Members will receive one updated statement that will include their recalculated pension input amount for the remedy period tax years, and confirmation of the pension input amounts for the three tax years before, 2014/15, 2013/14 and 2012/13.
We’ll be sending the majority of active or deferred remedy members their remediable pension savings statement from April 2024. And we’ll send a remediable service pension statement to remedy members already receiving pension benefits if their choice means they need one, in the months after they’ve told us their choice.
More information is available via: www.nhsbsa.nhs.uk/changes-public-service-pensions/understanding-effect-rollback-annual-allowance
When members can expect their McCloud choice communications
We recognise that members affected by the remedy want to know when they’ll be given their choice of pension benefits for their pensionable service for the remedy period.
Information for members is available via our website www.nhsbsa.nhs.uk/changes-public-service-pensions/when-youll-make-your-decision-about-your-nhs-pension-benefits
The regulations for the McCloud remedy come into effect on 1 October this year, and we are working to offer eligible active members their choice at the point they retire from April 2024.
It will take time to contact eligible members who have already retired, and we’ll do this in phases, beginning with members who retired on ill health grounds from October 2023.
For eligible members who retired based on their age and the beneficiaries of members who have died since retiring, we’ll begin contacting them in stages from April 2024.
For the majority of pensioner members, the choice is straightforward, so we’ll write to them first. This means we expect to have given around 70% of pensioner members and beneficiaries their choice by the end of 2024.
We expect to have contacted the vast majority of retired members by April 2025.
Everyone affected will be offered their choice automatically and if needed, we’ll backdate all payments to their date of retirement.
We’ve been developing and testing our choice communications in collaboration with trade unions, employer and staff representatives, a variety of members and the Department of Health and Social Care (DHSC) over the last year to ensure they’re as clear and helpful as members need them to be. We expect that in the vast majority of cases, this communication will be all members need to make an informed decision, and they will not need to pay for professional support to get their remedy.
