New law to rectify pension inequity

By Edie Bourne

Doctors who found out last month they can decide which benefits they should take to remedy the age discrimination caused by moving to the 2015 pension scheme have been told that new legislation is being drafted – but will not be in place for several years. 

NHS Employers has confirmed that the Government is working on the legislation and hopes to have this in place by October 2023, so that all members can make their choice of pension scheme benefits ‘with confidence’. 

New processes to help the decision will also be introduced. 

The ‘McCloud’ consultation concluded that affected doctors have the right to make a ‘deferred choice’ of which remedy benefits to take – the pension benefits from their previous 1995/2008 pension scheme or those from the 2015 scheme. 

By making this decision at retirement, doctors will be able to calculate which set of benefits are the most valuable to them. The Government has confirmed that full information will be provided to members at this time. 

However, if members have already retired before the new legislation has been introduced, they will be contacted and asked to make their choice retrospectively. Payments will then be backdated to the time when benefits became payable. 

Patrick Convey, technical director at specialist financial advisers Cavendish Medical, said: ‘It has been useful to get some clarity on how the “McCloud” ruling will work in practice, but we need to wait another two-and-a-half years for the full legislation to be produced. 

‘Doctors retiring before then – and we have witnessed many seeking early retirement because of the harsh tax rules and the impact of the last year – might be confused as to what this means for them. 

‘The Government has said that in some cases, it might be possible for the choice to be made sooner, but that the legislation that would allow schemes to do this is “limited”.’

NHS Employers also confirmed that from 1 April 2022, all members of former NHS pensions such as 1995 and 2008 will be moved to the new scheme, regardless of their age, and the old schemes will subsequently be closed. 

Mr Convey explained: ‘If you are a member of one of the legacy schemes, you will keep any service that you earned up until 1 April 2022 and be able to access your benefits normally. Going forward, any benefits you earn after this date will be in the 2015 scheme. 

‘As ever with all things relating to the NHS pension, keep all your records handy and please ensure that your pay and pensions details are kept up to date. We often see mistakes on payslips and even the tiniest of errors can have big impacts on pay and pension figures further down the line.’