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McCloud Remedy: Public Sector Pension Age Discrimination Fix

The McCloud remedy addresses age discrimination in public sector pension reforms. If you were in a public sector pension scheme before 2012, this affects you. Here is what happened, what choices you face, and how to make the right decision.

12 min read Updated March 2026

Background: What Went Wrong

In 2015, the government reformed most public sector pension schemes, moving members from final salary (defined benefit) schemes to career average revalued earnings (CARE) schemes. To ease the transition, members within 10 years of retirement were given transitional protection, allowing them to stay in the legacy scheme. Members further from retirement were moved immediately to the new scheme.

In 2018, the Court of Appeal ruled in the cases of McCloud (judges' pension scheme) and Sargeant (firefighters' pension scheme) that this transitional protection was unlawfully discriminatory on grounds of age. Younger members were treated less favourably simply because of their age.

Key ruling: The courts found that allowing older members to keep their more generous legacy pension benefits while forcing younger members into less generous CARE schemes, purely based on age, was unlawful age discrimination. The government accepted this applied to all affected public sector pension schemes.

Who Is Affected?

You are affected by the McCloud remedy if you meet all of these conditions:

  • You were an active member of a public sector pension scheme on or before 31 March 2012
  • You remained in active service during any part of the remedy period (1 April 2015 to 31 March 2022)
  • You were a member of one of the affected schemes

Affected Schemes

SchemeLegacy SchemeReformed (CARE) Scheme
NHS Pension1995/2008 Section2015 Scheme
Teachers' PensionFinal SalaryCareer Average
Civil ServiceClassic/Classic Plus/Premium/NuvosAlpha
Armed ForcesAFPS 75/AFPS 05AFPS 15
PolicePPS 1987/NPPS 2006PPS 2015
FirefightersFPS 1992/FPS 2006FPS 2015
JudicialJUPRAJPS 2015

How the Remedy Works

The remedy has two phases:

Phase 1: Rollback (1 October 2023)

On 1 October 2023, all affected members were returned to their legacy pension scheme for the remedy period. This means your pension record for 1 April 2015 to 31 March 2022 now shows legacy scheme benefits, regardless of whether you had transitional protection or were moved to the new scheme.

Phase 2: Deferred Choice (When You Retire)

When you take your pension benefits, you will be given a choice for the remedy period. You can select either:

  • Legacy scheme benefits — the final salary or earlier CARE scheme benefits for the remedy period
  • Reformed scheme benefits — the new CARE scheme benefits for the remedy period

Your pension administrator will provide a Remediable Service Statement (RSS) showing the value of both options to help you decide. The choice only applies to the remedy period — service before 1 April 2015 stays in the legacy scheme, and service after 31 March 2022 stays in the reformed scheme.

No wrong answer in most cases: The deferred choice mechanism means you make your decision at retirement, when you can see which option produces the better outcome based on your actual career and salary history. For most members, the legacy scheme will provide a higher pension, but this is not always the case — particularly for members who had salary fluctuations or breaks in service.

Which Option Is Usually Better?

The answer depends on your individual circumstances, but some general patterns emerge:

  • Legacy is usually better if — your salary increased significantly during the remedy period, you are in a final salary scheme (benefits are based on your highest salary), or you value the specific features of the legacy scheme such as different retirement ages
  • Reformed may be better if — your salary decreased during the remedy period, you had a break in service, or the CARE revaluation rate produced higher accrued benefits than the final salary calculation

Tax Implications

The McCloud remedy creates potential tax complications that you should be aware of:

  • Annual allowance — the change in pension benefits may alter your annual allowance position for tax years within the remedy period. If the remedy means you now exceed the annual allowance in any year, there may be additional tax to pay
  • Scheme pays — special voluntary scheme pays provisions allow your pension scheme to pay any additional annual allowance charges on your behalf, with a corresponding reduction in your pension
  • Tax refunds — if the remedy means you were overcharged tax in previous years, HMRC will need to reassess and issue refunds
  • Compensation interest — where the remedy results in additional pension contributions being required, compensation interest may apply to reflect the time value of money
Tax complexity: The tax position around the McCloud remedy is unusually complex. If you are a higher earner or have used a significant proportion of your annual allowance during the remedy period, consider seeking specialist tax advice. The carry forward rules may also be affected.

Already Retired Members

If you retired before the remedy was implemented, your pension scheme should contact you with options. The process varies by scheme, but generally:

  • You will receive an Immediate Choice exercise letter explaining your options
  • You can choose legacy or reformed benefits for the remedy period
  • If the remedy results in a higher pension, you will receive arrears for the difference
  • If you do nothing, the default position (legacy scheme) will apply

What You Should Do Now

  1. Check if you are affected — review your pension scheme membership and confirm you were an active member before April 2012
  2. Wait for your Remediable Service Statement — your pension scheme will issue this document showing both options
  3. Compare the options carefully — look at both the pension amount and any associated lump sum differences
  4. Consider the tax implications — particularly if you are a higher earner or have complex tax affairs
  5. Seek advice if in doubt — a pension adviser can model both scenarios and help you understand the full financial impact
Need help deciding? The McCloud remedy choice can be complex, particularly for higher earners or those with mixed service across different schemes. An FCA-regulated pension adviser can model both options and advise on the tax implications. Get matched for free →

Frequently Asked Questions

The McCloud remedy is the government's solution to age discrimination in public sector pension reforms. It gives affected members a choice between legacy and reformed scheme benefits for the remedy period (1 April 2015 to 31 March 2022).
You are affected if you were an active member of a public sector pension scheme on or before 31 March 2012 and remained in service during any part of the remedy period. This covers NHS, Teachers, Civil Service, Armed Forces, Police, Firefighters and Judicial pension schemes.
You will choose between legacy scheme benefits and reformed CARE scheme benefits for the remedy period. Your pension administrator will provide a Remediable Service Statement showing both options. If you have not yet retired, the choice is made at retirement.
If you have not yet retired, you do not need to make a decision immediately. Your choice will be offered when you retire. If you have already retired, your scheme should contact you with details. Check your Remediable Service Statement when it arrives.
Yes. Changes to your pension benefits may affect your annual allowance for previous tax years. If the remedy means you exceeded your annual allowance, HMRC may reassess your tax position. Special provisions handle these complications, including voluntary scheme pays arrangements.

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