McCloud Remedy Frequently Asked Questions

Members do not need to do anything.  When they take their pension, NILGOSC will compare the pension that they have built up from 1 April 2015 to 31 March 2022 in the career average scheme with the pension they could have built up had the final salary scheme continued.  If the final salary pension would have been higher, the difference is added to their pension.

Left the LGPS (NI) before 1 October 2023 – NILGOSC will recheck these records and work out provisional underpin figures.  The final underpin figures will not be worked out until they take their pension at retirement.

Left the LGPS (NI) on or after 1 October 2023 – NILGOSC will include the underpin in the calculation of their deferred benefits. Provisional underpin figures will be calculated at the date they left the LGPS (NI).  Final underpin figures will not be worked out until they take their pension at retirement.

Took their pension before 1 October 2023 – NILGOSC will review the pension that they are being paid.  If the pension they would have built up between 1 April 2015 and 31 March 2022 in the final salary scheme would have been higher than in the career average scheme, then their pension will be increased.  NILGOSC will also pay arrears of pension and interest. 

NILGOSC has over 50,000 records to review so it will take some time to review all the cases.  For most members the pension that they built up in the career average scheme will have been higher, so no increase will be due.

Take their pension on or after 1 October 2023 – if they are protected NILGOSC will take this into account when it works out their pension.  If their pension is increased because of the underpin we will tell them how much has been added.  They do not need to do anything as the protection will automatically apply.  For most members the pension that they built up in the career average scheme will have been higher, so no increase will be due.

Retired before 1 October 2023 – If they retired on ill-health from deferred membership and are protected, NILGOSC will review the pension that they are being paid.  If the pension they would have built up between 1 April 2015 and 31 March 2022 in the final salary scheme would have been higher than in the career average scheme, then their pension will be increased.  NILGOSC will also pay them arrears of pension and interest.

If they retired with a tier 1 or tier 2 ill-health pension (from active membership) before 1 October 2023 their pension will have been increased by a proportion of the amount of pension they could have built up between their leaving date and their Normal Pension Age. If they are protected, NILGOSC will check their underpin calculation and it will include any part of the increase that applied in the period up to 31 March 2022 or age 65 if this is earlier.  If their pension is increased, then NILGOSC will pay them arrears of pension and interest.

Retired on or after 1 October 2023 – If they retired on ill-health on or after 1 October 2023 and have protections, NILGOSC will include the underpin in their calculations in the same way as for all retirements.

On flexible retirement members can choose whether to take all or some of the pension they have built up.  The underpin check is carried out when they flexibly retire, and if their pension increases, a proportion of the increase will be paid to match the proportion of benefits that they are taking that were built up after 31 March 2015.  A further underpin check will be carried out when they take the remainder of their pension.

If they flexibly retired before 1 April 2022 and remained a member of the LGPS (NI) they will build up further pension that also has underpin protection.  NILGOSC will carry out a further underpin check when they retire.

If they are transferring to another public service pension, the scheme that they are transferring to will generally give them protection in that scheme. This will likely not be an underpin as this is unique to the Local Government Pension Schemes. Instead, members are given a choice between a career average pension and a final salary pension for benefits which are built up between 1 April 2015 and 31 March 2022.

If a member transfers to a public service scheme and has a disqualifying break they will lose underpin protection.

Criminals are known to target pension savings so members should read NILGOSC’s pension scam pages before deciding to transfer.  https://nilgosc.org.uk/members/leaving/be-fraud-aware/protecting-your-pension-from-scammers/

If a member was protected by the underpin and has already transferred their pension out, then NILGOSC will review the transfer value paid and will contact any affected members if an additional payment is due.  NILGOSC has over 50,000 records to review so it will take some time before these cases will be reviewed.

For most members the pension that they built up in the career average scheme will have been higher than what would have been built up had the final salary scheme continued, therefore the career average transfer value paid will have been higher than any final salary transfer amount for the period from 1 April 2015 to 31 March 2022 and no payment will be due.

Transfer into the LGPS (NI) before 1 October 2023 – the McCloud Remedy applies to all public service pension schemes.  Pension benefits that originally had protection in another scheme will continue to be protected in the LGPS (NI), provided that a member did not have a disqualifying break.  When members take their pension, the underpin check will include transferred in service that relates to the protected period from 1 April 2015 to 31 March 2022.  This is complicated and it could be some time before all the guidance and information is in place to deal with these transfers.

Transfer into the LGPS (NI) on or after 1 October 2023 – members have 12 months after joining the LGPS (NI) to decide whether to proceed with a pension transfer from another public service pension scheme.  The protections in other public service schemes gives members the choice of either final salary or career average pension benefits for the period from 1 April 2015 to 31 March 2022.  The protection is different in the LGPS (NI) where, if members transfer, they receive career average pension with a final salary underpin.  Members do not need to make a choice in the LGPS (NI). The protection will automatically apply. If a member transfers protected benefits after a disqualifying break, they will lose their protection and receive a career average pension with no underpin protection in the LGPS (NI).

If a deferred member rejoins the LGPS (NI) on or after 1 October 2023 they can choose to combine their two periods of membership within 12 months of re-joining. Only employers can choose to extend this 12-month period for members. NILGOSC cannot do this.

Members have a lot to consider when they are thinking about combining their benefits and the Re-joining the Scheme Guide sets out these considerations in Section 5. You can also refer to Section 2.3 of the Employer Guide. As a result of the recent rule changes, members will also need to consider what happens if they have underpin protection on their deferred benefits.  The main considerations if their deferred benefits are protected by the underpin are:

• If they keep their benefits separate, their deferred benefits will retain their underpin protection, but their new pension record will not have underpin protections.
• If they have a disqualifying break and combine their pension records, they will lose underpin protection.
• If they do not have a disqualifying break and combine their benefits, they will keep their underpin protection.

If members have membership in another public service pension scheme before 1 April 2012 they will need to tell us, when we ask them for this information.

If a member is protected, when they take their pension, we will work out whether they are due any increase because of the underpin.

NILGOSC has over 50,000 records to review to ensure that members receive the correct pension, so it may be some time before we ask for this information.  We may also need additional information from employers to enable us to check member’s records.

When a member takes their pension, NILGOSC will check the pension that they have built up from 1 April 2015 to 31 March 2022.  We will compare the career average pension built up with what they could have built up in the final salary scheme, had it continued.  If the final salary pension is higher, the difference (the underpin) is added to their pension.

However, the check is complicated as the following parts of a member’s pension are excluded from the underpin check:

• extra pension bought by additional pension contributions (APCs) to boost their pension.
• extra pension that employers have bought for the member.
• extra pension that members have bought by paying additional regular contributions (ARCs) or added years that they have bought.
• transfers from a non-public service pension scheme.
• reduced contributions that members have paid while in the 50/50 section of the Scheme.
• any pension debits which apply because a member’s pension was shared with a former spouse or civil partner.
• any Scheme pays debits where a member has asked NILGOSC to pay their annual allowance tax charge for them with a corresponding reduction to their pension.
• additional voluntary contributions (AVCs).

Any additional pension contributions (APCs) that members paid to buy back pension that was ‘lost’ while they were away from work during the remedy period (1 April 2015 to 31 March 2022) are included in the underpin check.  The corresponding period that members have paid for will also be included to work out the final salary pension for the underpin check.

When members get divorced or their civil partnership is dissolved, the Court takes the value of their pension into account in any settlement.  If a member’s pension includes an underpin amount, then that increase is included and, if their pension is shared, part of that increase will be passed to their former spouse or civil partner.

For most members the pension they built up in the career average scheme is higher than they would have built up in the final salary scheme, so no underpin applies and there is no change to the pension share awarded to their former spouse or civil partner.

Death grants – underpin protection does not change the death grant if members die as an active member, as the death grant is a multiple of their pay and not the pension that they have built up.

If a member dies after taking their pension, then the death grant is calculated based on their annual pension.  If their pension is increased because of the underpin, then the death grant will be increased too.

If a member dies as a deferred member, the death grant is calculated on their yearly deferred pension.  If they are protected by the underpin, the provisional underpin figures from when they left the Scheme are used to work out if their pension should be increased.  If an increase applies, then the death grant will be increased too. 

Death grant paid before 1 October 2023 – NILGOSC will review death grants paid before 1 October 2023 for deceased protected deferred and pensioner members.  If underpin protection means a higher death grant should have applied, then the difference will be paid.

NILGOSC has thousands of payments to review so it will take some time to work through the exercise.

In most cases, the deceased member’s pension will not increase because of underpin protection and the death grant will not increase.

Survivor pensions – these are payable to the spouse, civil partner, cohabiting partner or eligible children after a member dies.  If a member is protected by the underpin, then NILGOSC will work out whether any survivors’ pensions should be increased to reflect the part of the increase that would have applied to their pension.  Any adjustments to a member’s pension because of early or late retirement are ignored when working out the survivor pension and any increase.

NILGOSC will review any eligible survivors’ pensions that started before 1 October 2023. If the pension should have been increased, then we will pay arrears and interest.

NILGOSC has thousands of payments to review so it will take some time to work through the exercise.

If a member’s pension is increased because of underpin protection, the increase is excluded for annual allowance purposes.  They may still have a tax charge, but it’s based on their pension excluding the underpin addition.

It is possible that a few members may have retired before 1 October 2023 under the old underpin rules, had an underpin increase and an annual allowance tax charge in the year they retired.  Members who are in this group may have paid too much tax, or asked NILGOSC to pay too much tax on their behalf.  HMRC has processes in place to deal with these overpayments and NILGOSC will contact the members this applies to.

In addition, a few members may have taken their pension before 1 October 2023 and paid a lifetime allowance tax charge and are now due an increase to their pension because of the new underpin rules from 1 October 2023. They will not pay another lifetime allowance tax charge because of this increase. In addition, lifetime allowance was abolished from 6 April 2024.