GPs and other NHS pension members will soon be able claim compensation if they incurred financial losses as a result of the McCloud remedy.
NHS Business Services Authority (NHSBSA) published its rules for the compensation scheme today, revealing that members can claim either £500 or £1,000 to cover the cost of necessary financial advice, depending on their situation.
Five years ago, the Court of Appeal found that the Government had committed age discrimination when reforming the NHS pension scheme in 2015.
The reforms had meant that some members were forced to move to the 2015 Scheme, while those who were within 10 years of their normal pension age on 31 March 2012 were allowed to remain in their legacy schemes with ‘transitional protection’.
After legal challenges were brought by doctors, judges, firefighters and others, the Court of Appeal found this amounted to ‘unlawful discrimination on grounds of age,’ as the protection was offered only to older members of the scheme.
The Government has since sought to remedy this discrimination with new regulations which are called the ‘McCloud remedy’.
As a first step, in October last year, the Government automatically ‘rolled back’ members with no protection from the reforms into their legacy scheme (the 1995/2008 scheme) for the seven-year period to which the remedy applies (2015 to 2022).
On retirement, these members will then have a choice of whether they receive the 1995/2008 scheme or the 2015 scheme benefits for this period.
The new ‘NHS cost claim back scheme’, announced last year with full details published today, allows members ‘directly affected by the remedy’ to claim back ‘direct financial losses or tax losses’ incurred.
The guidance said: ‘The remedy has been designed to correct the age-related discrimination identified in the McCloud ruling, and choosing pension benefits for the remedy period will be straightforward for most members.
‘However, a small minority with more complex situations may need professional advice. Members can apply to recover the cost of this advice, as well as any other direct financial or tax losses, using the Cost Claim Back Scheme.’
If the decision about which scheme to apply for the seven-year period is complex, members may need to seek financial advice – they can now claim up to £500 for each piece of advice.
For members whose tax position is affected, NHSBSA stipulates use of the HMRC Digital Service. Any accountancy services used to complete this application can be compensated by up to £1,000 per piece of advice.
From April this year, new pensioner members will likely be able to make the ‘McCloud choice’ and so make claims for any financial advice.
But those who have already started receiving pension benefits may have to wait until April 2025 to do so.
Graham Crossley, NHS pensions expert at wealth management company Quilter, said the details of this compensation scheme ‘will be welcome news for impacted members’.
But he warned that the £500 limit for financial advice compensation ‘may actually be insufficient to cover costs for the complex financial planning’ required.
Mr Crossley told Pulse: ‘I think some might be disappointed by the levels, particularly if they have a complex choice to make at retirement.
‘I think they may end up having to pay financial professionals on top of what they can recover on the scheme. I wouldn’t be surprised if that gets challenged back a bit as time progresses.’
Last year, medical accountants warned that GPs could be ‘overlooked’ in the McCloud remedy measures due to potential issues with NHSBSA sending them the necessary financial statements.
The BMA had opposed the Government’s previous decision to pass costs related to the McCloud remedy onto members, and in 2022 the union was granted a judicial review into the Government’s ‘unlawful’ handling of NHS pensions.
