Can You Help With My NHS Pension and McCloud Remedy?

Yes I can! The NHS pension is lucrative but complex. Lucrative because it is one of the few defined benefit (DB) salary schemes left. Complex because DB schemes are hard to understand, have unintuitive tax implications and there have been three different schemes over the years (1998, 2008 and 2015).

On top of this, you may have the McCloud remedy to deal with.

What is the McCloud Remedy?

The McCloud Remedy is a complex legal case that has significant implications for the NHS pension scheme. It stems from a 2015 reform of public sector pensions that was found to be discriminatory based on age. As a result, the government is now implementing the McCloud Remedy to rectify this issue, which involves recalculating pension benefits for many NHS employees, including doctors.

Am I Affected by the McCloud Remedy?

The McCloud remedy will affect up to 100,000 doctors. You are most affected if:

You are a mid-career doctor
You contributed to the NHS pension scheme between 1st April 2015 and March 31st 2022
You have received a Remedial Pension Savings Statements (RPSS)

If you've received a RPSS then you definitely need to act!

Is the McCloud Remedy Better for my NHS pension?

Generally, yes but there are knock-on implications.

The McCloud Remedy requires the NHS to recalculate pension benefits for all members. This recalculation involves comparing the benefits accrued under the 2015 scheme with those that would have been accrued under the legacy schemes (1995 or 2008). The more favourable outcome will be applied to the member's pension record.

What are the Tax Implications?

The McCloud Remedy can have varying tax implications for doctors. Some may be entitled to tax refunds, while others may face additional tax liabilities. It's crucial to understand how the recalculation affects your individual tax position.

Tax Refunds: Doctors who paid more tax under the 2015 scheme than they would have under the legacy schemes may be eligible for tax refunds.

Tax Liabilities: Conversely, some doctors may find that their pension growth under the legacy schemes was higher, leading to potential additional tax liabilities.

What Should I do Next?

Because of the change in pension benefits, your tax position may have changed. HMRC have provided an online triage tool to help determine if and how you are affected.

Check for Correspondence: Check that you've received the Remedial Pension Savings Statement (RPSS). If you haven't received a letter yet, it's essential to check with the NHS Pensions to confirm your status.
Triage: Once you receive your RPSS, the next step is to use the online triage tool provided by HMRC. This 10-question tool will help you determine whether you need to take further action. You need a Government Gateway login and the link is here: https://www.gov.uk/guidance/calculate-your-public-service-pension-adjustment
Full application: if you are affected then you will need to submit a full application for tax recalculation. This is done using the same link. The complexity starts here.
Seek Expert Advice: If you're unsure about any aspect of the process or need assistance with the tax implications, it's advisable to seek professional advice from a specialist medical accountant or independent financial advisor. If you meet the criteria you can get a refund for up to £1,000 of the costs of using an accountant or independent financial advisor (link).

Where Can I Read Up on This?

NHS Pensions guidance - it is comprehensive but a long read.
Infographic link as of Feb 2025
Medics Money McCloud Hub - one of the best websites out there for doctor finances

How Can Alongside Accounting Help?

If you don't correct your tax position with HMRC, then you could lose out in tax refunds or be liable for additional taxes, interest and penalties. Alongside Accounting can help you navigate through the process.

You have to go back 8 (!) tax years to 2015/16. That means a lot of data to gather
Guide you through the complexities of the annual allowance carry forwards and taper
I can recalculate your tax position to give you an estimate of your tax charge or tax refund
The full application has up to 200 questions to answer and I can do the legwork for you
Ensure that any tax liability is paid by the pension scheme rather than out of your pocket

Contact me here if you want help.