1/ A thread [1/2]about your NHS pensions, tax & the age discrmination “McCloud” case👇

OK this is complicated stuff, Im going to take you through it step by step. But its important, and will affect your pension, so buckle up and pay attention!

Please share & RT/share awareness

2/ To understand “McCloud” let's rewind to yesteryear- you gave a lifetime of public service & (deservingly) got a good “final salary” pension.

Broadly in 1995 (or “legacy”) pension scheme, each year you got 1/80th of your “final salary” as a pension & 3/80th a tax free lump sum

3/ Back in yesteryear, pensions cost 5 or 6% gross salary. For example you worked 37 years & final salary £120k, pension= 37/80ths x £120k=£55,500. You would get this at normal retirement age- 60yrs & it would be index linked to inflation, plus a lump sum (3/80ths) of £166,500

4/ So roll on 2006-08 & government were worried about affordability of the scheme. Life expectancy was increasing so people were in retirement longer. So they made the scheme more expensive & introduced a new “2008” section for new entrants. The 08 scheme removed the lump sum

5/ Existing 95 members had a “choice” to move to ‘08’ scheme. It had a higher retirement age (65) but paid a higher “accrual rate” (60ths not 80ths). Rather than “final salary” (best of last 3 yrs) it was based on a more complicated “reckonable” pay based on best 3/10 yrs pay.

Cont👇
26/ If you have paid AA tax between 1995-22 it is likely your charges will be lower in 1995 than in 2015 scheme. This is because the AA rules are particularly unfair to members of 2 schemes. If your AA charges go down during any of the remedy period, you can claim a refund

27/ It does not matter if you paid cash for AA or used scheme pays, if you overpaid these charges can be refunded. If you charges go up (unlikely unless you have “MHO” status) you may have to pay back tax. There is usually a statutory limit of 4 years for paying underpaid tax.

28/ This limit of 4 yrs of underpaid tax was referenced in the consultation document 👇, although the position is less clear in the full consultation response. We will need to see the final regulations to understand the implications.

29/ The consultation document also stated that members who choose reformed 2015 in retirement & incurred AA charges would be “compensated”. Again detail in is less clear in the full consultation response. We will need to see the final regulations to understand the implications.

30/An important area are “contingent decisions”. Many members took decisions i.e. “opting out” of the scheme based on the age discrimination. @theBMA argued certain cases should automatically be compensated vs having to prove this on a “case by case” basis