McCloud Judgement - what does it mean?
So in NHS pension news, there has been talk about the McCloud judgement. This relates to two different cases made against the government by a judge and firefighters in regards to public service pensions. They won their case against the government on age-discrimination basis and therefore the government will be forced to act. Here is the very simplified break down of this ruling.
In 2015, a new type of NHS pension was introduced, which put everyone under a Career Average Revalued Earnings (CARE) scheme and aligned the retirement age to the State-Pension retirement age. Now the complicating part is whether you were switched to this new scheme or not.
- If you were paying member of the NHS pension scheme prior to 1st April 2012, whether you were moved into the new scheme was determined by age.
- If you were 50+ years old in the 1995 scheme or 55+ years old in the 2008 scheme at this date (10 years away from that schemes retirement age) then you would stay in that scheme.
- If you were under 46.5 years old in the 1995 scheme or under 51.5 years old in the 2008 scheme at this date then you would have automatically been moved into the new scheme.
- If you were in-between these ages, then you would be moved into the new scheme on your own personal transition date depending on your month of birth.
Therein lies the age-discrimination, people who are only 4 years apart in age could end up with very differing retirement benefits.
What now?
Anyone who was a member of the NHS pension scheme prior to 1st April 2012 will be rolled back to their previous pension (sadly not me...). The period from 1 April 2015 to 1 April 2022 is to be termed the ‘remedy period’ with all members being moved into the reformed scheme at the close of this period. What this reformed scheme will be has not been decided but likely will be very similar (if not identical) to the existing 2015 scheme.
Moving back to the old scheme will mean recalculation of annual allowance tax charges, lifetime allowance charges, benefits already paid, survivor benefits and more. If you retired or left the scheme on the basis of being forced to change schemes, then that is also an issue. All this provides headaches for the members and the people calculating it.
At the point of the retirement, eligible members will be given the choice about whether they would like to receive their 1995/2008 Section benefits or 2015 Scheme benefits for the period between 1 April 2015 to 31 March 2022 (the remedy period). Because it is uncertain which scheme will actually be more beneficial for someone's pension until retirement, it is hoped a calculation for both options will be given to the member for them to make an informed choice. This will hopefully be in place by October 2023 but the scheme are contacting those members who have already retired or going to retire prior to this.
If you joined later than 1st April 2012, then there likely will be no changes to your pension schemes. If you joined prior to 1st April 2015, then you'd be in the 2008 scheme until you moved to the 2015 scheme on the 1st April 2015. Come 1st April 2022, there may be a new scheme that may be introduced so that everyone will be on the same scheme.
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