The McCloud remedy removes the age discrimination built into the 2015 public service pension reforms. For most schemes it covers service in the remedy period from 1 April 2015 to 31 March 2022. That service is moved back into the legacy (pre-reform) scheme, and members choose between legacy and new-scheme benefits for it. The change can alter pension savings figures for past years, so annual allowance charges may need to be recalculated. Members who want their scheme to pay a new charge must elect by 6 July 2027.
Where the remedy came from
When the reformed schemes started in 2015 (2014 for the Local Government Pension Scheme in England and Wales), members within 10 years of retirement were allowed to stay in their legacy schemes. In December 2018, the Court of Appeal ruled in Lord Chancellor v McCloud [2018] EWCA Civ 2844 that this transitional protection unlawfully discriminated against younger members of the judicial and firefighters' schemes. The government accepted that the judgment affected all the public service schemes. The Supreme Court refused the government permission to appeal on 27 June 2019. The remedy was legislated in the Public Service Pensions and Judicial Offices Act 2022, which received Royal Assent on 10 March 2022, and the main remedy has applied since 1 October 2023.
Since 1 April 2022, every member builds up benefits in the new scheme, whatever their age.
Who is affected
For Chapter 1 schemes, you have remediable service if all of these apply:
- Earlier membership. You had pensionable service on or before 31 March 2012;
- Service in the remedy period. You had pensionable service between 1 April 2015 and 31 March 2022;
- No long gap. You had no break in service of more than five years that started or ended between 1 April 2012 and 31 March 2015.
HMRC divides schemes into three groups. Chapter 1 schemes include the NHS, teachers, civil service, armed forces, police and firefighters. Chapter 2 covers judicial schemes, and Chapter 3 covers local government schemes. The remedy period is 1 April 2014 to 31 March 2022 for local government schemes in England and Wales, and 1 April 2016 to 31 March 2022 for agency schemes.
The deferred choice underpin
In Chapter 1 schemes, service in the remedy period is "rolled back": it is treated as if it had always been in the legacy scheme. When the choice has to be made depends on your status on 30 September 2023:
- Active or deferred members. You choose legacy or new-scheme benefits for the remedy period when you retire. This is the deferred choice. If you do not choose, the scheme decides;
- Pensioners and deceased members. You (or the personal representatives) get an immediate choice and have one year from receiving the remediable service statement to make it. A choice of new-scheme benefits is backdated.
Schemes had to send every member a remediable service statement by 1 April 2025 comparing the two sets of benefits. Active members receive one every year until they make their choice.
The tax effect: annual allowance
The remedy changes the pension input amounts used to test your savings against the annual allowance. Because benefits for those years are recalculated under different scheme rules, the input for a year can go up or down. Your threshold and adjusted income may also change, which matters if you were close to the tapered annual allowance. The scheme sends revised or "remediable" pension savings statements. Remedy changes must be reported through HMRC's Calculate your public service pension adjustment service, not through your Self Assessment return.
Who deals with the change depends on the tax year:
| Tax years | If a charge you paid goes down |
|---|---|
| 2015/16 to 2018/19 (compensation period) | HMRC passes the details to the scheme, which may pay you compensation or increase your benefits |
| 2019/20 to 2022/23 (tax administration period) | HMRC repays you with repayment interest, or the scheme increases your benefits if it paid the charge |
New or increased charges arise for the tax years 2019/20 to 2022/23. You can pay them yourself, in which case HMRC sends you an assessment, or elect for the scheme to pay.
Annual allowance charges for 2022/23 are also reported through the service rather than on the 2022/23 tax return. Our pension contribution limits guide explains how the annual allowance and taper work, and the annual allowance calculator lets you test individual years.
Scheme pays and deadlines
- Scheme pays election: 6 July 2027. SI 2026/673 extended this deadline from 6 July 2025 for members who were active or deferred on 1 October 2023, so it now matches pensioners'. Elections can be made through HMRC's service;
- After 6 July 2027. A late election becomes a voluntary scheme pays request. The scheme still pays, but it is not jointly liable, so you may be liable for any further charges or penalties;
- Amending a scheme pays notice. Possible until 5 July 2032;
- Reporting. Regulation 32 of SI 2023/912, as amended by SI 2026/673, sets the deadline for reporting new charges or changes to charges through HMRC's service. If you were an active or deferred member on 1 October 2023, it is 31 January 2025 or, if your scheme sent you a pension savings statement on or after 1 November 2024, three months after that statement. If you were a pensioner (or had died) by 1 October 2023, it is 31 January 2027, or three months after a statement sent on or after 1 November 2026 or after the end of your election period, if later. Applications for refunds of tax you paid yourself are due by 31 January 2029, or 31 January 2031 for pensioners (regulation 38).
HMRC's July 2026 newsletter gives an example of the scheme pays timetable. HMRC passes a mandatory election to the scheme on 15 July 2026, which falls in the quarter ending 30 September. The tax is due 45 days after the end of the following quarter, which ends on 31 December, so the scheme must pay by 14 February 2027. For a voluntary request, the 45 days run from the end of the quarter in which the scheme receives it.
What to do now
If you had, or nearly had, an annual allowance charge between 2015/16 and 2022/23, check that your scheme has sent remediable pension savings statements for every affected year, and run each year through HMRC's service. If a new charge is due and you want the scheme to pay it, elect before 6 July 2027. Doctors should also check the NHS pension position described in our guide for doctors. If you took benefits during the remedy period, a lifetime allowance charge may also change, up or down; our lifetime allowance guide explains what replaced it.
Our accountants for doctors can work through NHS pension remedy statements and calculations, and our private client tax team can review remedy statements for teachers, police officers, civil servants and other public sector members.