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NHS pension members face ‘tough’ decisions and potential costs under age discrimination remedy

by Rima Evans
18 April 2024

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Thousands of medical professionals, including GPs, left the NHS pension scheme when reforms – later ruled to be age discriminatory – saw it change from a final salary to a career average scheme in 2015, data has revealed.

And now they could face ‘significant costs’ even under the plan agreed to remedy the discrimination.

A Freedom of Information (FOI) request by Wesleyan, the specialist financial services mutual, found that a total of 14,412 GPs, hospital doctors and dentists members left the NHS pension scheme between 1 April 2015, when members were moved over to a career average scheme, and 31 March 2022.

However, a 2018 Court of Appeal judgment found the process for moving members to the new scheme discriminated against some on the basis of age.

And as part of the arrangement to remedy this discrimination, also known as called the McCloud remedy, those who opted out of the scheme between 1 April 2015 and 31 March 2022 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.

Experts at Wesleyan have warned that while opting back in could benefit some members, it could also come with potentially significant cost.

For example, 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, they pointed out.

Alec Collie, head of medical at Wesleyan, said thousands of medical professionals could now face a tough decision as to whether or not to apply to opt back into the NHS pension scheme 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,’ he explained..

Each person will need to determine what the best option is for them, Mr Collie advised. ‘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.’

Meanwhile, other GPs also face ‘confusing’ separate decisions about pension choices they made in 2015.

At the time, certain members of the 1995 section of the pension scheme were given the option (called Choice 2) to move their service to the 2008 section before being moved to the new 2015 pension scheme.

Again, as part of the McCloud remedy, they can now revoke that choice and put any service they moved to the 2008 section back to the 1995 section.  

Wesleyan’s FOI found that around 1,618 GPs, hospital doctors and dentists are likely to have received letters about the opportunity to reverse their ‘Choice 2’ decision.

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

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

And he warned: ‘Crucially, the letters don’t include sufficient detail on what the various options mean for scheme members, which they need to make an informed decision’.

He said anyone who has received a letter should ‘seek professional help to calculate the precise implications for them so that they can make an informed decision’.

In January, it was announced that NHS pension members, including GPs and practice managers, affected by the McCloud remedy and who have suffered financial or tax losses can claim compensation, under the Cost Claim Back Scheme.

It offers compensation capped at two different amounts – £500 and £1,000, both inclusive of VAT, depending on the type of request being made.