What is the McCloud Remedy?
When public service pension schemes were reformed in 2015 older members were protected from the changes. In 2018, the Courts found that younger members of the Judges’ and Firefighters’ pension schemes had been discriminated against as the changes did not apply to them. The changes made to the Scheme from 1 October 2023 are called the McCloud Remedy and remove the discrimination found in the McCloud court case. These changes are backdated to 1 April 2015.
In the LGPS (NI) when a protected member retires, their pension in the career average pension scheme built up over the underpin period is compared with the pension that they would have built up in the final salary scheme, had it continued. If the final salary pension would have been higher, their pension was increased. This is known as the ‘statutory underpin’. The underpin period is from 1 April 2015 to 31 March 2022.
Since 1 October 2023, eligible younger members are also retrospectively protected by the underpin. This does not apply to all members.
Do I have underpin protections?
You will have underpin protections in the LGPS (NI) if you meet all the following conditions:
- you were paying into the LGPS (NI) at any time between 1 April 2015 and 31 March 2022
- you were paying into the LGPS (NI) or another public service pension scheme before 1 April 2012
- you do not have a disqualifying break
- you were under your final salary normal retirement age, usually age 65, at any time between 1 April 2015 and 31 March 2022.
Underpin protection only applies to pensions built up from 1 April 2015 to 31 March 2022. The underpin period is shorter if you left the Scheme or reached your final salary normal retirement age (usually age 65) before 31 March 2022. There is no underpin protection on any pension benefits built up after 31 March 2022; these are career average pensions only.
You do not have underpin protections if you:
- left the Scheme before 1 April 2015 and did not become active in the Scheme again, or
- reached your final salary normal retirement age (usually age 65) before 31 March 2015.
A disqualifying break is a continuous period of more than five years where you were not paying into either the LGPS (NI) or any other public service pension scheme.
A public service pension scheme is one that covers civil servants, the judiciary, the armed forces, local government workers, teachers, health service workers, fire and rescue workers, members of the police forces or members of a new public body pension scheme.
You can check if you are affected by the McCloud remedy by using the gov.uk online tool.
Do I need to do anything?
Most members do not need to do anything as NILGOSC can identify which members have underpin protection based on their LGPS (NI) pension records. You do not need to combine your pension records for the underpin to apply. If you have membership in another public service pension scheme before 1 April 2012 you will need to tell us, but only when we ask you for this information. This is likely to be before Christmas 2023.
If you are protected, when you take your pension, we will work out whether you are due any increase because of the underpin.
Very few members will receive an increase because, for most members the pension that they have built up in the career average pension scheme is higher than they would have built up in the final salary scheme.
The new rules became law on 1 October 2023 and will mean a significant amount of extra work. It will take time to review all the cases. We will contact anyone whose pension is in payment and will increase because of the McCloud Remedy. We will only write to you if the new rules mean your pension will increase or if we need more information from you to establish if your pension will increase under the new rules.
Will my pension increase?
Most members are unlikely to see an increase in their pension because they have built up a higher pension in the career average scheme than they would have in the final salary scheme.
Your pension does not increase because of the underpin until you finally take it at retirement. At that time, any reductions for early payment or increases for late payment will be included when the comparison between your final salary pension and career average pension for the underpin period is made. The underpin period runs from 1 April 2015 to 31 March 2022.
Any increases that do apply are likely to be small.
How does the underpin work?
The calculation of the underpin is a two-step process:
Step 1 – If you leave the LGPS (NI) before you take your pension or when you reach age 65 as an active member, NILGOSC will work out provisional underpin figures.
Step 2 – When you take your pension, NILGOSC will adjust the provisional underpin figures calculated in Step 1 to work out final underpin figures. These final figures will take account of revaluation and pension increases as well as any early retirement reductions or late retirement increases that may apply.
Who is likely to be affected by the underpin?
Most members are unlikely to see an increase in their pension because they have built up a higher pension in the career average scheme than they would have in the final salary scheme.
An increase to your pension is more likely if:
- you have a significant increase in your pay late in your career.
- you transfer protected pension benefits to the LGPS (NI) from another public service pension scheme and your new pay is much higher than the pay you were on when you left the other scheme.
- your pension is adjusted because you are taking it early and your State Pension Age is over age 65.
- you leave the LGPS (NI) and the best of the last three years’ pay or a three year average pay in the last 10 years is used to work out your final pay.
However, even if one of above applies to you, this does not guarantee an increase to your pension.
What will NILGOSC do?
From 1 October 2023 NILGOSC will begin reviewing the records of its members who are protected by the underpin. There are approximately 50,000 records to review and this will take time. Not all the guidance or information that is required is immediately available.
Pensions in payment will be reviewed as soon as possible. We will contact anyone whose pension is in payment and will increase because of the McCloud Remedy. We will only write to you if the new rules mean your pension will increase or if we need more information from you to establish if your pension will increase under the new rules.
IMPORTANT: NILGOSC will look at its pension records to work out if you are protected by the underpin. If you were paying into another public service pension scheme before 1 April 2012 NILGOSC will not know about this unless you have transferred this previous pension to us. We will ask you to let us know about any relevant pension scheme membership. It is essential that you provide the information that is needed so that you get the protection you are entitled to.
Training for employers on the McCloud Remedy
The McCloud Remedy Employer Training Session, Video Transcription (PDF, 280KB)