The McCloud Pension Remedy: What NHS Staff Need to Know

The long-awaited McCloud pension remedy is finally being implemented, but it brings significant complexities that NHS staff and GP practices must prepare for. At the centre is the transition to the 2015 NHS pension scheme, which was found to be unlawful age discrimination when introduced.

When the 2015 scheme rolled out, members moved over based on their proximity to retirement age. Those within 10 years stayed in the legacy 1995 or 2008 schemes, while others transitioned to the new scheme over several years until 2022. However, this process disadvantaged younger members.

The McCloud remedy key dates has two parts: First, in April 2022, all legacy scheme members were moved into the 2015 scheme. Second, starting October 1, 2023, affected members were returned to their legacy schemes for the remedy period between April 2015 and March 2022.

This second step is necessary because pension growth for 2015-2022 was originally calculated under the 2015 scheme rules. It now needs revising based on the more favorable accrual rates of legacy schemes like 1/80th vs 1/54th. Most are likely to see reduced pension tax liabilities for those remedy years as a result.

However, recalculating is an enormous undertaking. By October 31, 2024, NHS Pensions must issue hundreds of thousands of statements showing revised annual allowance figures for 2015-2022 under the legacy scheme calculations. Issuing so many statements nationwide in just a 3-month window will be extremely challenging for the administrators.

For NHS staff, the critical first step is to not ignore these statements when that fateful brown envelope arrives in late 2024. The revised figures must be reported to HMRC by January 31, 2025 – an extremely tight turnaround that could result in penalties if missed.

While HMRC cannot adjust annual allowance liabilities before 2020 due to their statutory time limits, the remedy does allow claiming tax rebates for any overpayments from 2015-2019. This is part of the £1,000 compensation per person for costs associated with the McCloud remedy.

At Ballards LLP, we have developed approved HMRC forms to streamline reporting the recalculated figures. We can handle the entire documentation process for our clients, with fees projected to fall within that £1,000 compensation amount in most cases.

In preparation, I recommend checking your pension records now for any missing service years that could impact growth calculations. Request an updated pension service extract from NHS Pensions if your records seem incomplete.

The McCloud process is extraordinarily complex, made even more challenging by the tight reporting deadline this tax year. However, our team is fully prepared to guide NHS staff through it step-by-step once those remedy statements finally arrive. Staying ahead will be crucial to meet HMRC’s requirements and claim your compensation entitlement.

By Peter Herniman, Tax Director at Ballards LLP

For more details about the McCloud remedy, contact Peter at, or check out our medical insights and podcasts.

Disclaimer (as of 21/06/2024): This article has been prepared for information purposes only as of the stated date. The information provided may not be relevant or accurate for any other date. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.

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