NHS McCloud Remedy 2026/27: What It Means For Your Pension

The McCloud remedy is the largest single change to the NHS Pension Scheme since the 2015 reforms. It corrects an unlawful age-discriminatory transition and gives ~750,000 NHS scheme members a choice over which set of pension rules applies to their 2015-2022 service.

What McCloud is

In 2015 the UK government reformed all major public-sector pension schemes - moving everyone from final-salary or 1/80th-style schemes onto Career Average Revalued Earnings (CARE). Existing older members got "transitional protection" - they stayed on the legacy scheme rules. Younger members were forced into CARE.

In 2018, the Court of Appeal ruled in McCloud v Ministry of Justice and Sargeant v London Fire Brigades that this transitional protection was unlawful age discrimination. The remedy applies across the firefighters', judiciary, NHS, civil service, teachers', armed forces and police pension schemes.

The remedy period

For NHS Pension Scheme members the "remedy period" is 1 April 2015 to 31 March 2022. Service during this period can - at the member's choice - be treated as either:

1. 1995 Section (or 2008 Section if you joined NHS Pension before that point) - 1/80th accrual of final pensionable pay, plus an automatic 3/80ths lump sum, plus normal pension age 60.
2. 2015 Section CARE - 1/54th annual accrual revalued in service at CPI + 1.5%, normal pension age = State Pension Age.

Service after 31 March 2022 sits in the 2015 Section for everyone (no choice).

How the choice works: Deferred Choice Underpin (DCU)

You do not need to choose now. The remedy implements a Deferred Choice Underpin - your decision is made at the point you retire and claim your pension.

NHSBSA will send a Remediable Service Statement (RSS) shortly before you can claim. The RSS shows your benefits under both options - 1995/2008 Section vs 2015 Section - and you elect at that point which to take.

The deferred choice means you do not need to guess which option will be better. By the time you retire, you know your final pensionable pay, your career length and any final-salary uplift - the variables that determine which option wins.

Which option typically wins?

The two options favour different career patterns:

• 1995/2008 Section wins for members with substantial salary growth during 2015-2022 and a high final-salary year. The 1/80th × final pensionable pay formula is sensitive to the last 3 years of pensionable pay.
• 2015 Section CARE wins for members whose pensionable pay during 2015-2022 was higher than their final-salary equivalent (career averagers + late-career salary cuts).

For NHS staff who progressed through Band 5 → Band 6 → Band 7 during 2015-2022 and then plateaued or stepped down, the legacy 1995/2008 Section often produces a materially better pension - sometimes by 15-25% of the annual amount.

For members who stepped up to Band 8a/8b/8c through the remedy period and continued to grow salary after 2022, CARE often wins because the high revaluation during the remedy period compounds usefully through to retirement.

Contributions - look back, refund forward

For the remedy period your contributions are recalculated:

• If you paid 2015 Section banded contributions (5.2% to 12.5%) but the 1995/2008 Section rates would have been lower, you receive a refund with interest.
• If you paid 1995/2008 rates lower than 2015 rates (rare), you may owe arrears - but the remedy is broadly designed so no member pays more in retrospect.

NHSBSA started issuing remedy-period contribution recalculations in 2023-2024. Most affected members have already received any refund due.

Tax position of the refund

Refunds of pension contributions are not taxable income - the contributions were paid net of tax under the net-pay arrangement and the refund simply restores what you would otherwise have had. HMRC does not treat the refund as taxable, though the interest element is taxable income reported on your Self Assessment.

What to do now

If you have NHS pensionable service between 1 April 2015 and 31 March 2022:

• Wait for your Remediable Service Statement - you do not need to act before retirement.
• Keep your NHS Total Reward Statement records each year so you have a clear timeline of pensionable pay.
• Use the NHSBSA member-hub login to check your contribution recalculation status.
• Pre-retirement (5-10 years out), seek NHS-specialist financial advice. Many independent financial advisers without NHS specialism do not understand the McCloud + CARE + 1/80th interactions in enough depth.

What this guide does NOT cover

• McCloud interactions with annual allowance breaches - if you triggered an AA charge during the remedy period the recalculation may change the charge. Specialist advice needed.
• Survivor benefits - 1995/2008 widow/widower pensions differ from CARE survivor pensions. The choice between options affects what your spouse receives if you die in service.
• Voluntary additional pension (AVC) - sits outside the McCloud remedy.

For NHS pension planning, use these site tools

• NHS Pension calculator (CARE 2015) - models the 2015 Section only
• State Pension forecast - State Pension layers on top of NHS Pension
• Salary sacrifice optimiser - for higher-rate / additional-rate NHS staff considering AVC sacrifice

Specialist NHS financial advice is essential for any retirement decision involving McCloud. This guide is general information only and not regulated advice.