In 2015, the Government reformed public service (NHS, Armed Forces, Teachers and Civil servants, for example) pension schemes, replacing the largest ‘final salary’ schemes with career average schemes.
Those closest to retirement age – within 10 years of retirement as of 31 March 2012 – were afforded ‘transitional protections’ that meant they were not moved to the new schemes.
The ‘McCloud judgement’ later found that this amounted to unlawful discrimination against younger members of the final salary schemes, and so the ‘McCloud remedy’ was born.
What is the purpose of the public service pensions remedy?
The remedy aims to ensure that affected members are, as far as possible, returned to the position they would have been in had the discrimination not occurred, and allows members to choose whether they receive 1995/2008 Scheme or 2015 Scheme benefits for their service during the remedy period (1 April 2015 and 31 March 2022).
You may be affected if you were a member of a public service pension scheme on or before 31 March 2012 and between 1 April 2014 and 31 March 2022.
Understanding your tax position
We are aware of some affected members having recently received Remediable Pension Savings Statements (RPSS), requiring them to check their pension tax position with HMRC.
The public service pensions remedy will potentially have altered the pension tax position for some individuals for the tax years 2015/16 through to 2021/22.
Consequently, as a result of recalculations in respect of pension growth (input amounts), this could alter the available annual and lifetime allowances, which in turn could impact pension charges – either by increasing the charge, or reducing the charge.
Some members may be able to claim refunds thanks to previous charges being cancelled out, while a number may find that they have additional tax to pay.
Individuals can check their tax position by using the Calculate your public service pension adjustment tool on HMRC’s website.
How can we help you?
Our team of expert tax advisers can support you to navigate HMRC’s adjustment calculation tool, and to understand your current pension tax position.
To talk to us about the public service pensions remedy, or to discuss how we can help you with wider personal tax planning and compliance, contact us today.
