NHS Pension members affected by the McCloud remedy and who have suffered financial or tax losses can claim compensation, under a newly launched scheme.
The Cost Claim Back Scheme set up by the NHS Business Services Authority (NHSBSA) is offering compensation capped at two different amounts – £500 and £1,000, both inclusive of VAT, depending on the type of request being made.
It sets out how and when members, including practice managers, GPs and others, who have incurred ‘direct financial or tax losses’ or who have had to seek out expert financial advice to make sense of the McCloud remedy changes can make a claim.
The NHSBSA sets out specific examples of costs that can be refunded. These include:
- Where an individual has a ‘complex’ decision to make around the McCloud choice. This is the decision members will need to make about their NHS pension benefits on retirement. They will need to choose whether to receive pension benefits from the 1995/2008 scheme (also known as the legacy scheme) or the 2015 scheme for the period of membership between 1 April 2015 and 31 March 2022. NHSBSA said this will be a ‘straightforward’ choice for most members but that ‘a small minority with more complex situations may need professional advice’. In these cases, members can apply to recover the cost of this advice and will be compensated up to £500 including VAT per piece of advice.
- Where someone employed an independent financial advisor (IFA) or accountant for advice about the move to the 2015 Scheme.
- Support that may be required where a member needs to reassess their annual allowance tax position as a result of NHS pension benefits accrued between April 2015 and April 2022 being rolled back into the 1995/2008 scheme. Up to £1,000 including VAT is being offered per piece of advice to claw back the cost of services to help with that.
Graham Crossley, NHS pension specialist at wealth management company Quilter, said the scheme will be welcome news for affected members.
However, he warned: ‘The £500 for financial advice may actually be insufficient to cover costs for the complex financial planning needed to determine the best choice for the client.’
It will also be a while before the process can get started, Mr Crossley added.
That’s down to the fact members must first wait to receive certain pension-related statements before being able to make any requests for refunds.
For example, information about the value of a person’s pension benefits – called remediable service statements – will start to be sent out to individuals as they retire after 1 April this year. However, those retired before this date may have to wait to receive their statements until April 2025.
Meanwhile, members whose tax position is affected due to the McCloud remedy, will receive pension savings statements by 6 October 2024.
Claims for compensation can be made by members 12 months after they receive the relevant statements, the scheme rules have stipulated.