The McCloud judgement
Anna Coff outlines what It means for NHS dentists and their pensions.
For dentists across Scotland who are part of the NHS pension scheme, significant changes are on the horizon following the UK Government’s response to the McCloud Judgement. The ruling, which found that changes made to public sector pension schemes in 2015 were age discriminatory, has led to a U-turn in policy. As a result, dentists and other NHS staff will soon receive pension statements outlining their options upon retirement.
Understanding the McCloud Judgement
In 2015, the Government introduced reforms that moved many public sector workers – including NHS dentists – into a new pension scheme, the NHS 2015 Scheme, which had different terms than the 1995 and 2008 Sections of the NHS Pension Scheme. However, transitional protections allowed older members to remain in their legacy schemes while younger members were moved to the new scheme. The McCloud Judgement ruled that these protections were unlawful on the grounds of age discrimination.
This landmark case has triggered a 2015 Remedy process (often referred to as McCloud Remedy), which aims to rectify the discrimination that occurred between 1 April 2015 and 31 March 2022. The remedy ensures that affected members are given the choice between receiving benefits from their legacy scheme (NHS 1995/2008) or the reformed scheme (NHS 2015) for that period when they retire.
What this means for NHS dentists
Dentists in the NHS Pension Scheme will start receiving a Remedy Pension Savings Statement (RPSS) that provides a breakdown of their pension options. This statement will show the pension input amounts (PIAs) for both their legacy and reformed schemes, allowing them to make an informed decision on which scheme benefits to choose.
Key points include:
- Rollback to Legacy Schemes: Members who were moved to the 2015 Scheme will have their pension benefits ‘rolled back’ into their original legacy scheme (1995/2008 Sections) for the remedy period (2015–2022).
- Choice at Retirement: Dentists will be able to decide at retirement whether they wish to receive their pension benefits from their legacy scheme or the 2015 Scheme for the remedy period.
- Tax Implications: The rollback may lead to changes in Annual Allowance tax charges, which will need to be revisited. Members will need to contact their tax advisor to determine if they owe additional tax or are eligible for a refund.
Making an informed decision
The decision on which scheme benefits to choose is a complex one, influenced by factors such as career progression, pension accrual rates, and retirement plans. Dentists are encouraged to seek professional financial advice to ensure they fully understand the implications of their choices.
For those who may have “contingent decisions”—such as opting out, retiring earlier, or transferring out of the scheme—because of the scheme changes, a process is being put in place to review these decisions retrospectively.
A fairer future for dentists in the NHS pension scheme
The McCloud Remedy is a positive step toward correcting past injustices, ensuring that all NHS pension scheme members are treated fairly, regardless of age. As the rollout of updated pension statements begins, dentists will now be better placed to plan for their financial futures with clarity and confidence.
Anna Coff is a specialist in accountancy for healthcare professionals, advising dentists and other NHS professionals.
E: anna.coff@eqaccountants.co.uk