Following the 2015 changes to public sector pensions, from 1 October 2023, certain younger members of public service pension schemes can use the McCloud remedy to benefit from the same annual and lifetime allowance protections as older retiring scheme members.

The McCloud remedy was introduced following changes to public service pensions in 2015. 

  • The 2015 changes moved public sector workers into new career average pension schemes with transitional protections being introduced for older members nearing retirement.
  • Following a 2018 Court of Appeal decision that found these transitional protections discriminated against younger members, the ‘McCloud remedy’ was introduced.

From 1 October 2023:

  • Younger members of all public sector pension schemes who have had an amount tested against the annual allowance or the lifetime allowance between 2015-16 and 2022-23 may be entitled to an adjustment, meaning that compensation is due for overpaid allowance charges.
  • This only applies to:
    • Members who were under 65 during the period 1 April 2014 to 31 March 2022.
    • Pension built up between 1 April 2014 and 31 March 2022.
    • Workers who were a member of the scheme before 1 April 2012 and who did not have a disqualifying break i.e. a period of more than five years when they were not a member of a public sector scheme between 1 April 2014 and 31 March 2022.
  • If you have not taken any pension benefits before 1 October 2023 you have until 31 January 2025 to contact HMRC about this. However, you will only receive an increase in your pension amount when you take your pension.

HMRC have now issued guidance on how the remedy works, including online tools for members and their agents to Check if they are affected and if so Calculate the adjustments and compensation due to them, and allow taxpayers to make a claim.

HMRC will shortly be advising agents on how they can make a postal or email claim for their clients. HMRC have also advised that affected members will not need to amend Self Assessment returns to benefit from any compensation and adjustments that are now owed to them. They should not make a claim until they have received new pension savings statements from their scheme administrators

Useful guides on this topic

Pensions: Tax rules and planning
What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there?

Pensions: Tax charge for excess contributions
When does a tax charge arise for excess pension contributions? What are taxpayers' responsibilities under Self Assessment? 

Pensions: Unauthorised payment charges
What is a pension unauthorised payment? When does a tax charge arise? Who pays the charge?

Pensions: Tax planning guides (index)
An index page to all of our pensions guides.

External link

HMRC guidance: How the public service pensions remedy affects your pension 

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