The McCloud remedy — what it means for your pension.
A discrimination ruling in 2018 required the government to fix how the 2015 public sector pension reforms were implemented. The fix — the McCloud remedy — affects millions of NHS, teachers', civil service and LGPS members. Here is what it means in practice.
- ▸The McCloud remedy corrects unlawful age discrimination in the 2015 public sector pension reforms, where older members were given transitional protection younger members did not receive.
- ▸The remedy period runs from 1 April 2015 to 31 March 2022 (1 April 2014 to 31 March 2022 for LGPS).
- ▸For NHS, TPS and civil service members, the remedy normally gives you a deferred choice when benefits are taken: legacy scheme rules or reformed scheme rules for the remedy period.
- ▸LGPS handles it differently: an automatic underpin is applied without any member choice required.
The discrimination case and the Court of Appeal ruling
When the government reformed public sector pensions in 2015, it introduced transitional protection for members closest to retirement. Those within 10 years of their normal pension age on 1 April 2012 were allowed to remain in the old, more generous final salary schemes. Younger members were moved to the new career average schemes immediately or after a tapered transition.
In 2018, the Court of Appeal ruled in the cases of McCloud (fire service) and Sargeant (judiciary) that this age-based transitional protection was unlawful age discrimination. The older members who kept their existing schemes were better treated than younger members on the basis of age alone.
The government was required to remedy the discrimination. The solution — legislated through the Public Service Pensions and Judicial Offices Act 2022 — is designed to give affected members a choice of benefits for the relevant period, so they can compare legacy and reformed scheme outcomes.
The remedy is intended to remove the discriminatory effect of the old transitional protections. For many members the practical result is no change; for some it changes the benefits or contribution/tax position for the remedy period.
Full details of the consultation and legislative process are on gov.uk.
The remedy period: 1 April 2015 to 31 March 2022
The remedy applies to a specific window of time: the remedy period.
For the NHS Pension Scheme, TPS, and Civil Service pension (alpha):
- Remedy period: 1 April 2015 to 31 March 2022
For the LGPS (which reformed a year earlier):
- Remedy period: 1 April 2014 to 31 March 2022
Benefits built up outside the remedy period — before it started and after it ended — are not affected. Post-April 2022 service for all affected schemes is in the 2015/reformed scheme with no choice.
Who is in scope: You are generally affected by the McCloud remedy if you were an active member of a public sector pension scheme on or before 31 March 2012 and had eligible pensionable service during the relevant remedy period, subject to scheme-specific continuity and break-in-service rules.
If you joined after those dates, the remedy does not apply to you.
How it works for NHS, TPS and civil service members
For members of the NHS Pension Scheme, Teachers' Pension Scheme, and Civil Service pension, the McCloud remedy generally works as a deferred choice when benefits are taken.
The mechanism:
- During the remedy period (2015–2022), eligible service is rolled back or compared against the relevant legacy scheme rules for that scheme and member.
- At retirement, your scheme administrator calculates your pension for the remedy period under both sets of rules: (a) the legacy scheme calculation, and (b) the 2015/reformed scheme calculation.
- You are given information so you can choose which set of benefits you want for the remedy-period service. You do not have to choose years in advance.
This is sometimes called "rollback" — the remedy period service was rolled back into the legacy scheme for calculation purposes.
Who benefits most: Members who received significant pay rises during the remedy period may benefit from legacy final-salary rules, because final salary schemes can use later pay rather than the pay earned at the time. A consultant whose pay grew substantially during 2015–2022 may find the legacy calculation more favourable, but contribution rates, lump sums, retirement age and tax can all affect the final decision.
Members whose pay tracked inflation closely during the remedy period may find the 2015/reformed scheme calculation is similar in value. The scheme administrator provides the remedy-period comparison through the scheme's remedy process.
What you need to do: In most cases, nothing immediately. Scheme administrators are implementing the remedy for affected members. When you take benefits, you should be provided with remedy information so you can make the relevant choice. If you are approaching retirement and were in service before April 2012, check that your scheme has your correct service records and contact your scheme if you have any queries about your entitlement.
For NHS members, use the NHS Pension Calculator, which has McCloud remedy modelling built in. For TPS, the Teachers' Pension Calculator covers the remedy. For civil service, see the Civil Service Pension Calculator.
How it works for LGPS — the underpin
The LGPS McCloud remedy works differently. Instead of a deferred choice at retirement, the LGPS applies an automatic underpin.
The underpin mechanism: For each affected LGPS member, the scheme will calculate both:
- The pension the member would receive under the old final salary rules for the remedy period
- The pension they actually built up under the 2014 career average scheme
If the final salary underpin produces a higher pension, the LGPS applies the underpin. The member does not need to request it, elect it, or do anything active.
Why LGPS is different: The LGPS is administered locally, so the remedy is implemented through an underpin rather than the same deferred-choice rollback model used in several unfunded public service schemes. The broad purpose is the same: affected members get protection if the legacy final-salary comparison is more valuable.
LGPS members: If you are an active or deferred LGPS member who joined before April 2012 and were still in service during the remedy period, your administering authority should be applying the underpin to your benefits. Check your annual benefit statement — it should note whether an underpin applies to your benefits and, if so, the underpin value.
If you are unsure whether you are affected, contact your LGPS administering authority directly. Use the LGPS Calculator for projections.
Do you need to do anything?
For most members, the answer is no. Schemes are implementing the McCloud remedy automatically, and the calculations are being applied by administrators as part of the retirement process.
However, there are some circumstances where it is worth actively checking:
- You have had breaks in service. If you left and rejoined between 2012 and 2022, make sure your scheme has complete and accurate service records. Gaps or errors in records could affect the remedy calculation.
- You have already retired since 2015. If you took pension benefits during the remedy period (between the scheme's reform date and 31 March 2022), you may be entitled to a retrospective adjustment. HMRC and scheme administrators are working through these "immediate choice" cases — contact your scheme if you retired during the remedy period and have not been contacted.
- You received a CETV during the remedy period. Transfer values calculated during 2015–2022 may have been incorrect because they did not account for the remedy. Separate remediation processes exist for these cases.
- Your annual benefit statement looks incorrect. Review your statement and query any figures that seem inconsistent with your service history.
The McCloud remedy does not require any action for most active members who will retire in the future. Scheme administrators will issue the relevant remedy information when benefits are taken or revisited. For more background, see the public sector pensions pillar guide and the McCloud remedy glossary entry.
This is factual information, not financial advice. If you're unsure what's right for your situation, speak to an FCA-regulated financial adviser.