In 2015, all main public service pensions were reformed, including the NHS Pension Scheme. These reforms included ‘transitional protection’ for people closer to retirement, however, in 2018, the Court of Appeal ruled that this directly discriminated against some younger pension scheme members. As a consequence, the Public Sector Pension Reform (PSPR) was initiated, often referred to as the ‘McCloud Remedy’, in recognition of the successful discriminatory challenge brought about by Judge Victoria McCloud.
There are many parts to the McCloud Remedy, but the first step was to migrate all pension contributions made between 1 April 2015 and 31 March 2022, for impacted members of the 2015 Scheme, to their legacy scheme (either 1995 or 2008 section of the 95/08 NHS Pension Scheme).
From 1 April 2022, all active members of the NHS Pension Scheme have been contributing to the 2015 Scheme but until the growth in the legacy pension scheme was known, it has not possible to determine the growth in the 2015 scheme for 2022/23 onwards.
New Information Being Issued to NHS Pensions Members – Remedial Pension Savings Statements (RPSS)
NHS Business Services Authority (NHBSA) - administrators of the NHS pension schemes - is now in a position to publish Remedial Pension Savings Statements (RPSS) which provides new information relating to the annual pension fund growth in the legacy scheme, as well as providing original growth figures across both schemes for this seven year ‘roll-back’ period. Additionally, details of any annual allowance excess tax charge elections (SPE2 Form) filed across the roll-back period (1 April 2015 – 31 March 2022), and the 2015 pension fund growth from 1 April 2022 to 31 March 2023 are also being provided.
NHS Pensions have published the order in which the RPSS will be released, and some members may not receive their RPSS until April 2025, or later.
What do you need to do now?
HMRC requires impacted members (individuals who have received an RPSS) to use a new tool produced by them; the ‘Public Service Pension Adjustment’ calculator, along with information detailed within the RPSS, to determine whether there are any annual allowance or lifetime allowance tax charges that need to be reported to them. This includes reductions to tax charges already reported as well as any potential new charges.
Using the Public Service Pension Adjustment Calculator
Under HMRC guidance, to use this tool/calculator you require the following information, as a minimum:
details of your total taxable income, adjusted income and threshold income
pension savings statements, including any revised statements received by you
details of your personal allowance from the tax year 2015 to 2016 to the tax year 2022 to 2023
Self-Assessment tax returns, if you filed them, including details of charitable donations (with gift aid, any annual allowance or lifetime allowance charges
retirement statement or a benefit crystallisation event statement, if applicable
You will also need details of any public service pension schemes you were a member of between 6 April 2015 and 5 April 2022 (the remedy period) and the tax year 2022 to 2023.
Additional information may also be required which will be dependent upon your personal circumstance.
The calculator is in two parts: an initial ‘triage’ will identify if you are required to complete the tool in full. If not, after the completion of the 'triage' stage, the tool will advise you that no further action is required (‘you are not eligible to complete the pension adjustment calculator’). We highly recommend you print a copy of this notice for your records to allow you to share the findings with HMRC, if your tax position is challenged at a later date. All members receiving an RPSS should complete the calculator triage stage as soon as possible to determine what further action, if any, is required. You will need to access the calculator via your personal 'Government Gateway' to link the calculator to your personal tax account.
Up to £1,000 Cost Claim Back Scheme for Accountancy Related Advice
Many members have already suffered professional charges in relation to the calculation of tax based on the original pension funds growth data, so the NHSBSA (backed by the Government) has put in place a ‘Cost Claim Back Scheme’ enabling some members to be reimbursed up to £1,000 for accountancy related advice sought in support of this exercise. Any ‘financial loss’ must be reported via the HMRC tool/calculator and a ‘decision maker’ will review the evidence and confirm if any reimbursement is to be awarded.
Whilst our interpretation is that a member should be able to seek compensation for any financial loss (including payment for professional services with this regard), we cannot guarantee that the compensation will be awarded.
How can we help?
Whilst we are not able to complete HMRC’s calculator on your behalf - it has been designed to be completed by the member as access is required via the personal 'Government Gateway' portal - we can populate our specifically designed PSPR template that will enable you to populate the full calculator with the correct information. The fee for this ‘standard service’ will be £1,000 + VAT for existing clients*. We reserve the right to increase our fee if we encounter any additional complexities during the data gathering exercise and this will be agreed with you in advance of undertaking the work.
We will use the information provided within the RPSS , along with historical data we have access to, to populate our bespoke PSPR template. If we identify potential errors within your RPSS, we will bring these to your attention and agree appropriate action. For peace of mind, all completed PSPR templates will be checked by a senior member of the Specialist Medical Services Team, before being issued for use with the HMRC calculator (please note that we cannot take any responsibility for the provision of incorrect data from NHSBSA).
Additional Pension Advisory Support
Following completion of the bespoke PSPR template, we can offer a non-obligatory meeting with a pension expert from Armstrong Watson Financial Planning Ltd to discuss your personal circumstances. This could include options for tax payments to pension fund modelling and pension forecasting.
*This also includes the determination of any annual allowance excess tax charge for 2022/23.
If you wish to discus how Armstrong Watson can support you, whether this be for specialist accountancy and taxation services, or advice relating to your NHS Pension, and/or to arrange a non-obligatory meeting, please contact a member of the Specialist Medical Services Team.
Contact our specialist medical services team on 08081445575 or email morag.miller@armstrongwatson.co.uk.
