FAQs: 2015 Remedy

What does it mean for those members who have taken ill health retirement since 1 April 2015 or are due to retire before the remedy has been implemented?

Last updated 17 September 2021

The government accepts that affected members of the reformed pension schemes who have retired since 1 April 2015 or will retire before the remedy has been implemented, already have an entitlement to be treated as a member of their legacy scheme for the remedy period if they wish.

However, giving effect to this entitlement before legislation is implemented creates complex issues, particularly where there are interactions with the tax system. The government is making legislative changes where necessary through the Public Service Pensions & Judicial Office Bill. There are also tax and scheme-specific legislative changes which will be required before the remedy can be implemented.

We will make sure that details of the process are updated to the website and provided to both members and employers when they become available.

Why did the Government’s reforms to the main public service pension schemes lead to discrimination?

Following negotiations with the trade unions, the 2015 public service pension schemes reforms included a policy of transitional protection. This meant members closest to retirement stayed in their legacy (classic, classic plus, premium and nuvos) scheme as they had the least amount of time to prepare for the changes.

The Court of Appeal later found this policy to be discriminatory against younger members in some schemes. Following the ruling the government confirmed that it would take steps to address the discrimination in all affected public service schemes.

Do members need to submit a legal claim to receive any pension changes to address the discrimination identified by the courts?

No, members do not need to submit a legal claim to receive any pension changes addressing the discrimination.

The government has committed to applying any changes across the main public service pension schemes and so both claimants and non-claimants who are eligible members will receive the pension changes.

What steps has the government taken so far to address the discrimination?

Since the judgment the government has been working on different methods to address the discrimination.

The government consulted between July and October 2020 to gather views on proposals to remove the discrimination. In February 2021, the government announced the implementation of a ‘deferred choice underpin’ which will allow eligible members a choice when they retire, of which pension scheme benefits they would prefer to take for the remedy period.

What is a deferred choice underpin and why has the government chosen this approach?

To address the discrimination identified by the courts, eligible members who were moved to the reformed pension scheme (alpha) in 2015 (or later if they had tapered protection) will be moved back into their legacy pension scheme for the period during which the discrimination occurred, between 1 April 2015 and 31 March 2022.

When members, or members who were originally protected, near retirement, they will receive a choice of which pension scheme benefits they would prefer to take for the period. This is called a ‘deferred choice’.

The choice will be between the member’s legacy (classic, classic plus, premium and nuvos) pension scheme benefits and their reformed pension scheme benefits.

By deferring the choice until shortly before retirement, it allows individuals to make their choice of which pension scheme benefits are better for them, based on facts and known circumstances as opposed to assumptions on their future career, health, retirement and other factors. The level of both pension scheme benefits will be known at retirement.

For those pensioners who are already receiving benefits relating to the period of discrimination between 2015 and 2022 there will be an immediate choice as soon as practicable once the necessary provisions are in place.

Who is in scope for these pension changes and will receive the ‘deferred choice’?

  • Individuals that meet the following criteria are in scope of the changes:
    • were members, or eligible to be members, of a public service pension scheme on the 31 March 2012;
    • were members of a public service pension scheme between 1 April 2015 and 31 March 2022; and
    • the two periods above were continuous (or treated as continuous under the scheme regulations, including those with a qualifying break in service of less than five years).

Why are members being asked to make a choice between their legacy (classic, classic plus, premium and nuvos) and reformed (alpha)pension scheme benefits?

The differences between the legacy and reformed pension schemes mean the set of benefits that is best for members depends on personal circumstances and preferences. This is why the government is providing members with a choice, to ensure they can choose which scheme benefits are better for them.

Schemes will provide information to members setting out their entitlement under both options, so members will have a clear understanding of the benefits available to them.

Why isn’t the government just returning everyone to their old schemes?

The government cannot simply place all members into their legacy scheme (classic, classic plus, premium and nuvos) without allowing them to access their reformed scheme benefits, because some members are better off in the reformed scheme.

What are the differences between the legacy and reformed schemes?

In the case of civil service pension scheme members the legacy schemes are classic, classic plus, premium and nuvos and the reformed scheme is alpha.

The main changes between the legacy and reformed schemes for most schemes included a change to career-average pension schemes from final salary and an increase in normal pension age.

The change to career-average means members’ pensions are now calculated on their average salary throughout their career as opposed to their final salary.

The reformed scheme was designed to make public service pensions more affordable and sustainable for the future, while still ensuring public servants received appropriate pension provision at retirement.

The reforms created a fairer system. The move from (mostly) final salary to career average pension means members accrue their pension at a typically higher annual rate based on their average salary. Although some members are better off in legacy schemes, the reformed scheme is more beneficial for others, particularly many lower paid members.

Will I lose all of my final salary benefits?

No. Any pension you accrued in a final salary legacy (classic, classic plus, premium and nuvos) scheme up to 1 April 2022 is protected and will make up part of your benefits when you retire. When you move to the reformed career average scheme (alpha) in 2022 a final salary link will apply, meaning that your salary in the year or years before retirement will be used to calculate your final salary legacy scheme benefits. This will be the case even if you continue to work for many years between 2022 and retirement. 

Will members who had ‘tapered protection’ also be asked to choose between legacy and reformed scheme benefits?

In the case of civil service pension scheme members the legacy schemes are classic, classic plus, premium and nuvos and the reformed scheme is alpha.

Members who received tapered protection in 2015, or would have received such protection but for the provision that unlawfully excluded younger members from transitional protection, will be offered a choice of whether to receive legacy or reformed scheme benefits in relation to any continuous service between 1 April 2015 and 31 March 2022.

This will remove the discrimination that arose between older members who were subject to transitional protection and younger members who were not.

How will people who retire before the introduction of the deferred choice underpin (DCU) be treated?

Members who have retired before the DCU is implemented and have a period of relevant service between 1 April 2015 and 31 March 2022, will be offered a choice once the legislative changes have been made to implement the DCU. The choice will be retrospective and backdated to the point that payment of pension benefits began.

In some cases, it may be possible for schemes to offer members a choice before the DCU is implemented.

However, the legislation that allows schemes to do this is limited in effect. It allows schemes to return eligible members who retired from the reformed scheme (alpha) to the legacy schemes (classic, classic plus, premium and nuvos) in relation to service after 1 April 2015 but does not allow for all consequential matters to be dealt with satisfactorily in all cases. So, for example, in cases where there are interactions with the tax system, perhaps where members have incurred or will incur tax charges or where contributions differ between the schemes, it might not be possible to address all these issues before new legislation is made to implement the DCU.

There are still complex issues to be resolved before schemes are in a position to process cases on a consistent basis - further updates will be provided as soon as possible.

In all cases where an individual receives a revised pension award, this will be backdated to the date their pension award relating to the remedy period was originally made.

Will the survivors of eligible members who have died since 1 April 2015 also be asked to make a choice between the different pension schemes?

Where an eligible member has died since 1 April 2015, schemes will review these cases as a priority. Where the member retired from the reformed scheme (alpha), schemes will seek to revisit cases ahead of the introduction of the DCU where this is possible. Schemes will check whether a higher pension or lump sum amount would be due under the alternative scheme.

In the case of any increase, schemes will inform surviving beneficiaries, and the higher amount will be paid with their agreement. If the higher amount is already in payment, the survivors will be notified.

In most cases the choice between benefits will fall to the late member’s surviving spouse or partner. If there are children also in receipt of a survivor pension, and the decision maker lives in a separate household to the child, any decision taken will not affect the child’s pension. Where the child and decision maker live in the same household, the usual rules around total survivor benefits payable will apply.

Why is the period when members will be receiving a choice of which pension scheme benefits they would prefer only between 2015 and 2022?

Members will receive a choice for the period between 2015 and 2022 because 1 April 2015 is the date when the reforms were introduced, and 31 March 2022 will be the point at which the legacy schemes will be closed to future accrual.

Why is the government saying all members should be in alpha (the reformed scheme) from 1 April 2022?

The reasons for the 2015 reforms still stand: the government is committed to ensuring generous public service pension provision, but this has to be affordable and sustainable in the long term. The reforms aimed to achieve this, whilst also being fairer to lower and middle earners.

The scheme that was introduced in 2014 and 2015 following the recommendations of the Independent Public Service Pensions Commission (the reformed schemes) offers generous pension provision, improves affordability and sustainability, and is fairer to lower and middle earners.

alpha is one of the most generous available in the UK: backed by the taxpayer; index-linked; and offering guaranteed benefits on retirement; comparing very favourably to the typical private sector scheme.

The reforms created a fairer system. The move from (mostly) final salary to career average pension means members accrue their pension at a typically higher annual rate based on their average salary. Although some members are better off in legacy schemes, the reformed scheme is more beneficial for others, particularly many lower paid members.

The transitional protection policy, which gave rise to discrimination, will have been removed and, from 1 April 2022, all those who remain in service will do so as members of reformed schemes, treating everyone equally in this respect, and ensuring the aims of the 2015 reforms are met.

Will these pension changes result in any tax changes for members?

The vast majority of members will see no changes to their tax position or will receive a refund as a result of the remedy.

In some cases, individuals may pay higher Annual Allowance charges, but typically only where their projected pension at retirement has increased. Similarly, some members that are already in receipt of their pension may need to pay additional Lifetime Allowance charges when the total value of their pension has increased.

Some members may also face changes in their contribution rates, which may also affect their income tax liabilities.

Where a member’s tax liability does increase, this will not exceed what they would have paid had they always been a member of the scheme they are moving into or receiving equivalent benefits.

What is the compensation scheme and how will it work?

The remedy attempts to put people in the right position directly; but sometimes it cannot, i.e. due to interactions with the tax system. Where this happens, compensation arises to redress members.

Compensation payments may be made to pension scheme members via application as a result of overpaid tax charges and where this cannot be repaid directly by HMRC. Where contributions have also been overpaid, schemes will provide direct compensation to members, as well as for instances where members may need independent financial advice to resolve their compensation arrangements. These overpayments would have happened unintentionally through the remedy of the discrimination.

When will the pension changes be implemented and introduced?

The government is introducing primary legislation through the Public Service Pensions & Judicial Offices Bill to implement a deferred choice underpin within schemes. All eligible members will be treated equally and will be able to choose to receive pension scheme benefits from either scheme. Where necessary, payments will be backdated to 2015.

Provisions for the deferred choice will be implemented by 1 October 2023 for all members. Scheme may implement provisions for deferred choice earlier where it is possible to do so.

Following introduction of the PSP&JO Bill, schemes will carry out consultations on more detailed scheme-specific changes to both prospective and retrospective scheme regulations.

Where the changes legislated for through the Bill produce disproportionate tax results that cannot be resolved through powers provided in the PSP&JO Bill, further changes will be made in the upcoming Finance Bill and scheme regulations. For example, the current framework does not straightforwardly permit individuals to ask their pension scheme to settle Annual Allowance charges from previous tax years by reducing their future pension benefits (‘Scheme Pays’) – this is being addressed in the upcoming Finance Bill. Further details will be published on any further measures in due course.

What are the next steps after the legislation has been introduced?

Following the introduction of the Bill, the government intends that the provisions for the deferred choice underpin will be implemented by 1 October 2023, or earlier where schemes are able to implement legislative change and processes ahead of that date.

What detail will scheme regulations contain?

The powers in the Bill to make scheme regulations can be used for the various purposes listed throughout the Bill. These include for example the process by which a member can make a choice or “election” to receive new scheme benefits, for interest to be paid to a member or scheme on any amounts owed to or by the scheme, to make provision for pension credit members, to make provision for members to receive remediable service statements, to provide for members who have made additional voluntary contributions and for members who have already benefited from an immediate detriment remedy.

Where it is particularly important that scheme regulations are consistent, the Bill will require them to be made in line with Treasury Directions. The powers to make scheme regulations are explained in the Delegated Powers Memorandum prepared by HM Treasury for the Delegated Powers and Regulatory Reform Committee.

How has COVID-19 affected the project?

COVID-19 has not caused any major delays to the project timeline.

What was the other proposal set out in the consultation and why didn’t the government choose that approach?

The other proposal set out in the consultation was called an ‘immediate choice’ which would allow members to choose which pension scheme benefits they would prefer to take for the remedy period between 2015 and 2022 soon after the point at which schemes implemented the changes.

While this approach would have resolved the issue sooner and provided individuals with more certainty around pension benefits, it would have placed higher risk on the member. This is because they would be basing their choice around assumptions on their future careers, health, retirement and other factors, rather than the facts and known circumstances that will apply at the point of retirement. This would have meant some members may have been much more likely to have chosen the scheme benefits that did not turn out to be best for them.

What pension scheme will individuals be a member of from 1 April 2022?

From 1 April 2022, all those who continue in service will be eligible to do so as members of their respective reformed pension schemes (alpha of which many are already members), regardless of age. This includes members who were previously covered by ‘transitional protection’.

This means that members will keep any service earned within the legacy schemes (classic, classic plus, premium and nuvos) up until that date and will be able to access those benefits in the same way and at the same time as they are currently able to, but any pension benefits earned after will be within the reformed pension schemes.

The legacy unfunded schemes will be closed to future accrual from April 2022.

Who should I contact for more information?

The Civil Service Pension website is where all of the current and up to date information is housed on 2015 Remedy (McCloud) along with these helpful FAQs. We are working through the impacts to those members who are affected. As soon as we know how you are impacted, we will tell you what it means for you and what action needs to be taken.

I am due to move into alpha under tapered enrolment, will I still move into alpha?

Yes. Until the changes to the pension schemes are agreed, members who have a future alpha enrolment date will continue to be enrolled into alpha.

I have only ever been a member of alpha, how will I be affected?

New entrants to the Civil Service who were enrolled into alpha when they joined are not affected by the Court’s ruling.

How will the changes affect my past Annual Allowance position?

The legal process will take into account the tax implications and HMRC are working alongside HM Treasury and the Civil Service Pensions team to make sure that this important issue is taken into account.

How up-to-date is the website?

We aim to update the McCloud judgment web pages within 24 hours of any important updates, and will ensure that FAQs are updated regularly so that members and employers have the most up to date information at their fingertips.

I've moved from one public service pension scheme to another - what does that mean for me?

This will depend upon the final policy decisions made on the pension scheme changes.

We will work with the other public service schemes to ensure that when implementing the court’s ruling you are compensated correctly.

Can I still buy AVCs or Added Pension?

I am retiring soon, how will I be affected?

All members who were subject to the discrimination will be within scope of any changes made to schemes, irrespective of their status, i.e. pensioner, still in service (active member), left service but not yet taken benefits (deferred member).

It’s unlikely that any changes will be made prior to you leaving, so your pension will be based on the current position, as shown in your annual benefit statements.  Should there be subsequent change needed due to the pension scheme changes being implemented, then we will write to you to confirm.  Please be assured, however, that the pension you have earned to date is safe.

If you’re moving address, please ensure you update your details with the Scheme Administrator (MyCSP).

If I leave my job or retire will I still have my pension looked at?

Yes. All members who were subject to the discrimination will be within scope of any changes made to schemes, irrespective of their status, i.e pensioner, still in service (active member), left service but not yet taken benefits (deferred member).

Does this only apply to those with service before 1 April 2012?

The discrimination identified by the courts relates to the different treatment applied to members who were in service on 31 March 2012.  

I think my spouse was affected by the age discrimination but they passed away last year. Will you review the pension I get now as their spouse?

Yes. If your spouse was affected by the age discrimination your pension will be reviewed and we will write to you once we’re in a position to confirm how the changes will affect you.  Please check the website for updates.

In the WMS released on 25th March, it mentioned that it would be helpful for members to retain their tax paperwork for 2015/16, what paperwork should I retain?

As the pension policy proposals are still being finalised, it is not possible at this stage to say how they will interact with the tax system.  

Therefore, it would be helpful if you would keep tax paperwork relating from April 2015 onwards. This would include:

  • Self-assessment returns
  • P60s
  • Annual Allowance and
  • Lifetime Allowance.

Should I just opt out?

If you are thinking of opting out of the Civil Service pension arrangements, remember that if you do, you will miss out on a range of valuable benefits for you and your family.

Your pension is an important part of your pay and reward package. As well as your pension contribution, your employer also pays a pension contribution on your behalf.

Will my contributions be refunded?

The vast majority of contribution rates changed on 1 April 2015 to become the same across all the Civil Service Defined Benefit pension schemes. Therefore, you would have paid the same contribution rate regardless of which scheme you were participating in, and so we don’t expect to refund contributions.

What does this mean for the cost control mechanism?

In January 2019, the government announced a pause to the cost control mechanism in public service pension schemes, due to uncertainty about benefit entitlements arising from the McCloud judgment.

The pause was lifted in July 2020 and HM Treasury confirmed the next steps. More details on the cost cap lifting (opens in a new window).

How does this relate to the cost cap?

The government explained when the McCloud consultation was launched that taking the McCloud remedy into account would mean that results from the cost control process would show higher costs than would otherwise have been the case.

Who is going to pay for all of this?

The government has made it clear that all costs associated with the ‘McCloud remedy’ are ‘member costs’ and will be paid by the scheme.

Will members receive the reductions in employee contributions they were expecting from April 2019? Why are you making people continue to overpay for their pensions?

Alongside the public consultation, the government announced that the pause of the cost control mechanism had been lifted. Accordingly, the government is in the process of completing the cost control element of the 2016 valuations. HM Treasury will follow the established procedure for valuations, working with schemes and member representatives, and plan for the process to be completed by schemes in 2021.

By taking into account the increased value of public service pensions as a result of the ‘McCloud remedy’, scheme cost control valuation outcomes will show greater costs than otherwise would have been expected. The government will consider how best to take forward the cost control mechanism outcomes for each scheme once the detail of these is known.

What are the contingent decisions?

The government has confirmed that all individuals who were members of a legacy scheme immediately prior to 1 April 2012, and have a period of service after 31 March 2015 during which they were members of a legacy or reformed scheme, will be given a choice between reformed or legacy scheme benefits for the period between 2015 to 2022.  In the case of civil service pension scheme members the legacy schemes are classic, classic plus, premium and nuvos and the reformed scheme is alpha.  If you opted-out from 1st March 2015 and have not been in either a legacy or reformed scheme since that date, you will not automatically be considered to be in-scope for the remedy process.

In the consultation document issued last July there was reference to 'contingent decisions', which are decisions that individuals took as a result of the (actual or perceived) implications of the introduction of the reformed schemes. These could include members choosing to opt out of the reformed schemes for various reasons, which will differ between individuals. It was acknowledged that members may wish to argue that they would have taken a different course of action had they known that continued membership of their legacy scheme during the remedy period was an option.  In the consultation response the government confirmed that members will need to make a claim to their scheme and to support this they will undertake further work with schemes to agree guidance on handling cases where members can show they have taken such contingent decisions about their scheme membership. The government is currently finalising its approach to contingent decisions in legislation, and is undertaking the work with schemes to develop guidance.

We are therefore not yet able to confirm the process.  We will however make sure that details of the process are updated to the website and provided to employers when they become available, although please note this is unlikely to be before April 2022.

What will the arrangements be for in-scope alpha members who bought ‘Added Pension (AP)’ after 1st April 2015, or are buying it during the 2021/22 financial year?

  • For members who have purchased Added Pension (AP) in alpha, a cash equivalent will be calculated and moved over into their legacy scheme e.g. classic, classic plus, premium, nuvos, and both values will be shown on member benefit statements every year.
  • When the member makes their choice at the point at which their benefits are paid, they will be able to choose whether they would prefer to take legacy scheme e.g classic, classic plus, premium, nuvos or their reformed scheme benefits (alpha), which will include the value of the added pension purchased for set of benefits.
  • We expect to implement the remedy during 2023 and we'll advise you in due course when the annual statements will be amended to reflect this change.

This is in line with the Government's consultation response: https://www.gov.uk/government/consultations/public-service-pension-schemes.