NHS Pension concerns – the McCloud Judgement

Martin Hendry

Martin Hendry

Chartered Financial Planner

Following the McCloud Judgement, the Government has changed the eligibility criteria for the NHS 2015 CARE Scheme so that from this tax year, 6 April 2022 – 5 April 2023, all continuing members of the NHS Pension Scheme will be transitioned to the 2015 CARE Scheme. 

This means that the previous NHS Pension Sections (1995 & 2008) closed to all members from 1 April 2022.

In the future, when retiring from the NHS Scheme, you will receive your 1995/2008 Section benefits, including any tax-free lump sum you were entitled to up to 31 March 2015.  You will then have the choice between your 1995/2008 Section benefits or 2015 CARE benefits for pension built up between 1 April 2015 and 31 March 2022, plus any 2015 CARE Pension from 1 April 2022 until your retirement date.

Annual Allowance

For this year tax year (2022/2023) we could see significant increases in NHS pension members’ benefits as Consumer Price Index (CPI) is currently running at 9%, according to Government figures, and is predicted to rise to 10% by the end of the year.  This is good news for retirement benefits, but not so good for Annual Allowance (AA) input values which you could be facing in the tax year. The 2015 CARE Scheme benefits are index linked by CPI + 1.5% and the CPI figure used in the calculation is the value in the September of the tax year which, this year, could cause your benefits to have an input value well in excess of the £40,000 AA (untapered), and therefore be facing Annual Allowance tax charges.

Whether you are a GP or a Hospital doctor, you should brace yourself for some possibly large increases in your NHS Pension benefits, which could be in excess of the AA of £40,000 - as a result of the high inflation environment we find ourselves in at the moment.

The British Medical Association (BMA) have shared their concerns with the Department of Health & Social Care and NHS England, and they have suggested following solutions: -

  1. Make alterations to Finance Act so that only real growth above inflation is measured
  2. Resolve technical issue around Negative Pension Input Amount
  3. An AA compensation scheme (where unfair AA charges are settled via government run scheme)
  4. A long-term unregistered scheme

They are encouraging members to raise this with your local MP’s and BMA will continue to lobby on your behalf.

Our Medical & Healthcare team can help look at your positions with regards to these concerns.

Get in touch

If you would like to discuss this further, please don't hesitate to get in touch with myself, a member of our Wealth or Medical & Healthcare teams, or your usual adviser.

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