GPs affected by pension remedy could face ‘significant costs’, experts warn

Thousands of NHS pension members affected by an age discrimination could face ‘significant costs’ as part of the McCloud remedy, experts have warned.

The Government committed age discrimination when reforming the NHS pension scheme in 2015, when most public service pension schemes were reformed, and has since sought to remedy this discrimination with new regulations, known as the McCloud remedy.

At the beginning of this year, NHS Business Services Authority (NHSBSA) published its rules for the compensation scheme, revealing that members can claim either £500 or £1,000 to cover the cost of necessary financial advice, depending on their situation.

According to data obtained through an FOI request by Wesleyan, the specialist financial services mutual, 14,412 members – including GPs – left the NHSPS between 1 April 2015, when it changed from a final salary scheme to a career average scheme, and 31 March 2022.

Those who opted out of the scheme in that time period will have the option to retrospectively opt back in for all or part of that period, if the reason they left was because of the age discrimination legislation.

But experts at Wesleyan said that while opting back in could benefit some members, it could also come with ‘potentially significant cost’.

They pointed out that those returning could face paying up to seven years of backdated pension contributions or have to reimburse any employer contributions that were redirected to their salary after they left the scheme.

Wesleyan’s head of medical Alec Collie said: ‘This data shows just how many people could be affected by this part of the remedy process.

‘Thousands of medical professionals could now face a tough decision as to whether or not to apply to opt back into the NHSPS for this seven-year period.

‘It’s a challenge because the benefit of doing that may be outweighed by any additional contributions or claw backs that are demanded, which might have to be paid now or taken out of their pension benefits.

‘Each person will need to determine what the best option is for them. This will likely be a complex decision, that will only be made more difficult with the current uncertainty over the future of the Lifetime Allowance and the risk of further pension tax issues.’

Wesleyan’s FOI also found that there are more than 1,618 GPs, hospital doctors and dentists who are likely to have received letters about their opportunity to reverse the ‘Choice 2’ decision they made about their pension in 2015.

‘Choice 2’ gave certain members of the 1995 section of the NHSPS the option to move their service to the 2008 Section before being moved to the new 2015 Pension Scheme.

As part of the McCloud remedy, they can revoke that choice and put any service they moved to the 2008 Section back to the 1995 Section. 

Wesleyan said that this could have implications for factors such as their pension income, retirement age, and the option to take part of their pension as a lump sum.

Mr Collie added that these letters are causing ‘confusion and concern’ because recipients have relatively little time to make what could be a big decision about their pension.

The new ‘NHS cost claim back scheme’, announced last year with full details published in January, allows members ‘directly affected by the remedy’ to claim back ‘direct financial losses or tax losses’ incurred.

Previously, medical accountants warned that GPs could be ‘overlooked’ in the McCloud remedy measures due to potential issues with NHSBSA sending them the necessary financial statements.

The BMA had opposed the Government’s previous decision to pass costs related to the McCloud remedy onto members, and in 2022 the union was granted a judicial review into the Government’s ‘unlawful’ handling of NHS pensions.