Changes were made to public service pensions in 2015 by the government. Most public sector workers were moved into reformed career average pension schemes. However, these changes did not extend to affect the pensions of some members who were close to retirement. A judgement followed from the Court of Appeal, which found that this amounted to age discrimination against younger members of the pension scheme.
The McCloud remedy is part of the government's action to rectify the position for younger members of the pension scheme. Due to the remedy, younger members who have had an amount tested against the annual allowance or the lifetime allowance between 2015/16 and 2022/23 may find that amount needs to be changed.
Pension administrators may therefore need to issue new or revised pensions savings statements or benefit crystallisation event statements to individuals who are affected by the remedy. HMRC’s collection of guidance for pension administrators includes details on which members may be affected and action required by administrators. There is also a collection of guidance for members.
HMRC has launched a new tool for members to calculate their public service pension adjustment and to make a claim. Taxpayers and agents should wait for revised pension statements for the relevant tax years before using this service. Claims should generally be made directly rather than by amending self assessment tax returns.
Agents can use the digital service on behalf of their clients to calculate compensation and adjustments to filed tax returns that are needed. They cannot currently submit a digital claim on behalf of a client. In the meantime, HMRC will provide a way for agents to submit the claim on behalf of their client either by email or post and will provide further details shortly.
Members who have not taken their pension benefits at 1 October 2023 will generally have until 31 January 2025 to submit the specified information to HMRC. Members of judicial or local government schemes who have retired or those acting on behalf of deceased members will generally have until 31 January 2027 to submit the specified information to HMRC.
The Tax Faculty
ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.