The McCloud remedy — what it means for your pension.
A discrimination ruling in 2018 required the government to fix how the 2015 public sector pension reforms were implemented. The fix — the McCloud remedy — affects millions of NHS, teachers', civil service and LGPS members. Here is what it means in practice.
- ▸The McCloud remedy corrects unlawful age discrimination in the 2015 public sector pension reforms, where older members were given transitional protection younger members did not receive.
- ▸The remedy period runs from 1 April 2015 to 31 March 2022 (1 April 2014 to 31 March 2022 for LGPS).
- ▸For NHS, TPS and civil service members, the remedy gives you a choice at retirement: legacy scheme rules or 2015 scheme rules for the remedy period — whichever is higher.
- ▸LGPS handles it differently: an automatic underpin is applied without any member choice required.
The discrimination case and the Court of Appeal ruling
When the government reformed public sector pensions in 2015, it introduced transitional protection for members closest to retirement. Those within 10 years of their normal pension age on 1 April 2012 were allowed to remain in the old, more generous final salary schemes. Younger members were moved to the new career average schemes immediately or after a tapered transition.
In 2018, the Court of Appeal ruled in the cases of McCloud (fire service) and Sargeant (judiciary) that this age-based transitional protection was unlawful age discrimination. The older members who kept their existing schemes were better treated than younger members on the basis of age alone.
The government was required to remedy the discrimination. The solution — legislated through the Public Service Pensions and Judicial Offices Act 2022 — is designed to ensure that no member is worse off under the reformed scheme than they would have been under the legacy scheme for the relevant period.
The remedy cannot reduce your pension. It can only maintain or increase it.
Full details of the consultation and legislative process are on gov.uk.
The remedy period: 1 April 2015 to 31 March 2022
The remedy applies to a specific window of time: the remedy period.
For the NHS Pension Scheme, TPS, and Civil Service pension (alpha):
- Remedy period: 1 April 2015 to 31 March 2022
For the LGPS (which reformed a year earlier):
- Remedy period: 1 April 2014 to 31 March 2022
Benefits built up outside the remedy period — before it started and after it ended — are not affected. Post-April 2022 service for all affected schemes is in the 2015/reformed scheme with no choice.
Who is in scope: You are affected by the McCloud remedy if you were an active member of a public sector pension scheme on or before 31 March 2012 AND continued in active service on or after the start of the relevant remedy period (1 April 2015 for most schemes, 1 April 2014 for LGPS).
If you joined after those dates, the remedy does not apply to you.
How it works for NHS, TPS and civil service members
For members of the NHS Pension Scheme, Teachers' Pension Scheme, and Civil Service pension (alpha), the McCloud remedy works as a deferred choice at retirement.
The mechanism:
- During the remedy period (2015–2022), your service is notionally treated as if it were in your legacy scheme (the 1995 Section, pre-2007 TPS, or classic/premium for civil service, as applicable).
- At retirement, your scheme administrator calculates your pension for the remedy period under both sets of rules: (a) the legacy scheme calculation, and (b) the 2015/reformed scheme calculation.
- You receive whichever is higher — you do not have to choose between them in advance, and you cannot be given the lower amount.
This is sometimes called "rollback" — the remedy period service was rolled back into the legacy scheme for calculation purposes.
Who benefits most: Members who received significant pay rises during the remedy period tend to benefit most from the legacy (final salary) calculation, because final salary schemes use your salary at retirement rather than the salary you earned at the time. A consultant whose pay grew substantially during 2015–2022 will likely find the legacy calculation more favourable.
Members whose pay tracked inflation closely during the remedy period may find the 2015 scheme calculation is similar in value. The scheme administrator performs both calculations automatically.
What you need to do: In most cases, nothing. Scheme administrators are implementing the remedy for all affected members. At retirement, you will be provided with both calculations and the higher amount will be used. However, if you are approaching retirement and were in service before April 2012, it is worth checking that your scheme has your correct service records, and contacting your scheme if you have any queries about your entitlement.
For NHS members, use the NHS Pension Calculator, which has McCloud remedy modelling built in. For TPS, the Teachers' Pension Calculator covers the remedy. For civil service, see the Civil Service Pension Calculator.
How it works for LGPS — the underpin
The LGPS McCloud remedy works differently. Instead of a deferred choice at retirement, the LGPS applies an automatic underpin.
The underpin mechanism: For each affected LGPS member, the scheme will calculate both:
- The pension the member would receive under the old final salary rules for the remedy period
- The pension they actually built up under the 2014 career average scheme
If the final salary calculation produces a higher pension, the LGPS automatically pays the higher amount. The member does not need to request it, elect it, or do anything active.
Why LGPS is different: The LGPS is administered by 87 separate local pension funds in England and Wales. The government chose the underpin approach rather than rollback because it is administratively simpler to apply across a fragmented scheme structure. The outcome for the member is the same: they cannot be worse off than under the old rules.
LGPS members: If you are an active or deferred LGPS member who joined before April 2012 and were still in service during the remedy period, your administering authority should be applying the underpin to your benefits. Check your annual benefit statement — it should note whether an underpin applies to your benefits and, if so, the underpin value.
If you are unsure whether you are affected, contact your LGPS administering authority directly. Use the LGPS Calculator for projections.
Do you need to do anything?
For most members, the answer is no. Schemes are implementing the McCloud remedy automatically, and the calculations are being applied by administrators as part of the retirement process.
However, there are some circumstances where it is worth actively checking:
- You have had breaks in service. If you left and rejoined between 2012 and 2022, make sure your scheme has complete and accurate service records. Gaps or errors in records could affect the remedy calculation.
- You have already retired since 2015. If you took pension benefits during the remedy period (between the scheme's reform date and 31 March 2022), you may be entitled to a retrospective adjustment. HMRC and scheme administrators are working through these "immediate choice" cases — contact your scheme if you retired during the remedy period and have not been contacted.
- You received a CETV during the remedy period. Transfer values calculated during 2015–2022 may have been incorrect because they did not account for the remedy. Separate remediation processes exist for these cases.
- Your annual benefit statement looks incorrect. Review your statement and query any figures that seem inconsistent with your service history.
The McCloud remedy does not require any action for most active members who will retire in the future. Scheme administrators will apply the better calculation at the point of retirement. For more background, see the public sector pensions pillar guide and the McCloud remedy glossary entry.
This is factual information, not financial advice. If you're unsure what's right for your situation, speak to an FCA-regulated financial adviser.