This week we are expecting the government to publish the response to the age descrimination case - “McCloud” - and how to remedy this in public sector pensions. Here is a quick primer on what to look for 👇

Please share to raise awareness / RT

[1]
[2] It is not the 2015 pension scheme itself which was found to be discriminatory, but rather the transitional protection for members closer to retirement. Everyone will revert to the 2015 “reformed” scheme after 2022. However the intervening years between 2015 and 2022 - the so
[3] called “remedy period” members who are in scope will get to pick between “legacy” (i.e. 1995 or 2008) or “reformed” (i.e. 2015 benefits).

Here is my primer on 4 big issues to look out for
[4] ISSUE 1️⃣ DCU vs IMMEDIATE CHOICE

✅”DCU” or deferred choice underpin - you choose the best pension (for 2015-2022) either legacy 95/08 or reformed ‘15 at your retirement. You can always choose highest pension when it is known
[5]

❌Immediate choice- you choose which pension (for 2015-2022) - either legacy 95/08 or reformed ‘15 - soon after 2022. You might make the wrong choice and get a less valuable pension, especially if the rules change in the future
[6] ISSUE 2️⃣- CONTINGENT DECISIONS

✅Contingent decisions for common scenarios - for example coming out of the scheme due to AA tax - automatically eligible for compensation. You will be given chance to buy back lost service (and pay any AA tax if required)
[7]

❌Contingent decisions for all scenarios decided on a “case by case” basis. Put the onus on the member to make their case, and no guarantee of acceptance
[8] ISSUE 3️⃣ - AA TAX

✅Full compensation for AA charges if choosing reformed pension over legacy at DCU - AA no higher than legacy
❌Not full AA compensation
[9] ISSUE 4️⃣ - ADVICE

✅For most medical members of the scheme, where AA tax is an issue, unpicking this will likely need professional advice. The need for advice is subsequent to the discrimination, so we think government should pay for this
❌No advice compensated
[10] Clearly the devil will be in the detail, and we will of course publish a detailed analysis (and any required next steps) once this is published.
[11] Working out AA tax is going to be very complicated. The remedy period covers 3 different tax regimes for AA, and in 19/20 there was the AA compemnsation sscheme in England & Wales. If you have overpaid tax it can be refunded for all 7 years.
[12] If you have underpaid AA tax (less likely unless you have "MHO status") you will have to paid any underpaid tax for the 4 last years before the rememdy is decided
[13] You might assume you will automatically be better off choosing the “legacy” vs "reformed" benefits but this will need careful consideration depending
⚫the age you want to retire
⚫your exposure to AA tax
⚫your need for a lump sum
⚫your need for dependant benefits.
[14] Unpicking all of this will be complex, but @TheBMA @BMA_Pensions has got your back & will be here to help💪

You dont need to pay money to a 3rd party law firm.

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