McCloud Remedy implementation dates

LazyGreyhound

As I understand it schemes have until Oct 2023 to implement the “underpin” provisions.

The Civil Service Pensions FAQs says this (apologies for long quote)

“Members who have retired before the Deferred Choice Underpin (DCU) is implemented and have a period of relevant service between 1 April 2015 and 31 March 2022, will be offered a choice once the legislative changes have been made to implement the DCU. The choice will be retrospective and backdated to the point that payment of pension benefits began.

In some cases, it may be possible for schemes to offer members a choice before the DCU is implemented.

However, the legislation that allows schemes to do this is limited in effect. It allows schemes to return eligible members who retired from the reformed scheme (alpha) to the legacy schemes (classic, classic plus, premium and nuvos) in relation to service after 1 April 2015 but does not allow for all consequential matters to be dealt with satisfactorily in all cases. So, for example, in cases where there are interactions with the tax system, perhaps where members have incurred or will incur tax charges or where contributions differ between the schemes, it might not be possible to address all these issues before new legislation is made to implement the DCU.”

 

Is anyone aware of schemes offering or intending to offer the choice to people who have already retired earlier than October 2023?

As referred to in the quote, I appreciate that some folks will have complex affairs, but for many a calculation showing what you will get if you revert to the legacy scheme versus what you will get if you stick with Alpha would be pretty straightforward and doesn’t justify the delay.

Dazed_and_C0nfused

As referred to in the quote, I appreciate that some folks will have complex affairs, but for many a calculation showing what you will get if you revert to the legacy scheme versus what you will get if you stick with Alpha would be pretty straightforward and doesn’t justify the delay.

Could you not just do this yourself?

Convert expected service to a date still several months in the future.

Convert new total service into appropriate proportion for your scheme.

Establish expected final salary in current scheme year

Bobs your uncle?

hugheskevi

LazyGreyhound said:

Is anyone aware of schemes offering or intending to offer the choice to people who have already retired earlier than October 2023?

As referred to in the quote, I appreciate that some folks will have complex affairs, but for many a calculation showing what you will get if you revert to the legacy scheme versus what you will get if you stick with Alpha would be pretty straightforward and doesn’t justify the delay.

Perhaps not too hard to show scheme benefits, but extremely hard to unravel anything should a member wish to make changes - plenty of unauthorised payment issues - for example, if a member decided to choose an option that gave them a greater lump sum, any additional payment would be outside the 12 month window for all PCLS to be paid on crystallisation. Taxation of arrears outside of the standard 4 year HMRC window would be problematic. Then there are changes to Pension inputs, Lifetime Allowance usage, and so on.

So there is a need for legislation to catch-up before any administrative changes to pensions in payment can be made. 

The Primary legislation has been introduced to Parliament, but it will be several months before the Bill becomes an Act. 

It will then be necessary to make changes to secondary legislation (ie scheme rules) using the powers in the Primary Act. There may also be taxation changes required in a future Finance Act.

Although the administration system changes can progress based on expectations, it isn't under all the scheme rules and legislation is passed that there is certainty and that admin systems can all be moved into final testing.

LazyGreyhound

Hi,

Yes that's what I have done and for us it makes sense to revert to the legacy schemes (my wife and I are both affected), however my understanding is that the providers have to give you the calculations as part of the process prior to allowing people to choose.

I would be happy to sign a disclaimer saying "I've worked out the figures, I want to revert to the legacy schemes, just give me the money now please" but I don't think they will offer that option 

Dazed_and_C0nfused

Have you compared the additional legacy pension (and lump sum if applicable) with the actuarilly reduced pension that you would get in your new scheme if retiring at the same time?

LazyGreyhound

hugheskevi said:

Lots of useful stuff

Thanks hughekevi, I was hoping you'd comment as you seem really knowledgeable on Public Sector Schemes

And I guess in truth, I knew that there would be a a lot of complexity to contend with, I was just rather optimistically hoping there might be some kind of fast track/streamlined process for those with straightforward affairs but as you have highlighted there are a lot of potential moving parts so it would be difficult to try and even identify or define "straightforward affairs".

Having said that, IIRC October 23 will be over 5 years from the judgement which seems like a long time, especially for older folk who will want to make use of the money whilst they are still fit and active. 

LazyGreyhound

Dazed_and_C0nfused said:

Have you compared the additional legacy pension (and lump sum if applicable) with the actuarilly reduced pension that you would get in your new scheme if retiring at the same time?

Yes, in the long term the new pension works out better but not for many years (post SP age) once you include the additional lump sump I'll get if I revert.