NHS, McCloud and Additional Pension

Lowtrawler

My wife has been making Additional Pension Contributions in her NHS Scotland 2015 Pension Scheme by monthly deduction for the past 6 years.

In September 2024, she retired and returned in order to claim her 1995 Pension and she continued in the 2015 scheme.  Under McCloud, all of her 2015 scheme membership to 31/3/22 was transferred into the 1995 scheme and brought into payment. She was not provided with any options on which scheme to take benefits under.

No change was made to the Additional Pension contract. The payments to date were not transferred into the 1995 scheme. In October, no deduction was made for the Additional Pension but when she queried this with Payroll / Pensions, it was restored in November with a double payment being taken. Hence, our expectation has been that the Additional Pension was unaffected by McCloud.

Today, I checked what the rules say about Additional Pension and McCloud. This appears to be covered by regulations 16 to 25 in part 4 of the draft SI (Summarised below). As the 1995 Pension brought into payment in September 2024 did not include any element of the 2015 Additional Pension and no McCloud options were provided to her.

Questions:

1.      Does this mean when she is presented with the McCloud options at a later date, she will receive additional 1995 pension benefits, arising from the Additional Pension contract, unless she elects to revert to membership under the 2015 scheme?

2.      If she does elect to revert to membership under the 2015 scheme, I assume she will need to repay any lump sum / pension payments made to date related to the 2015 scheme membership transferred into the 1995 scheme.

3.      Does anyone know how they will cost the Additional Pension payments for payment under the 1995 scheme e.g. she will have purchased around £1,800 of benefits over the 6 years but these would have been payable at 67. How are these to be converted to be payable at 60 under the 1995 scheme?

Part 4 Draft SI

Regulation 17 - applies to unprotected members and taper protected members who have not yet retired and who took out an election to buy 2015 scheme additional pension during the remedy period. Regulation 17 cancels the member’s rights to 2015 scheme additional pension bought during the remedy period. Those rights are replaced by new rights to additional pension under a corresponding option in the member’s remedy section of the legacy scheme. The additional pension under the member’s remedy section of the legacy scheme will be costed for payment at normal pension age 60.

Regulation 18 - treatment of contributions paid after 31 March 2022.

Transitional arrangements introduced from 1 April 2015 allow members to continue with a purchase of legacy scheme additional pension (being made by regular monthly contributions) after joining the 2015 scheme. In addition, the same transitional arrangements (mentioned in connection with regulation 17) allow members to claim 1995 section additional pension at their chosen birthday (age 60) without retiring or leaving NHS employment.

Those arrangements apply automatically to members whose 2015 scheme additional pension is converted to legacy scheme additional pension under regulation 17. This means that any additional contributions paid after the end of the remedy period (from 1 April 2022) will be applied automatically to the member’s corresponding option to purchase additional pension in their remedy section of the legacy scheme.

In summary:

·         additional pension purchased by contributions to the 2015 scheme during the remedy period is converted to additional pension in the member’s remedy section of the legacy scheme and, where the member continued to pay those contributions after 1 April 2022, those contributions will also buy additional pension in the member’s remedy section of the legacy scheme

·         members can claim 1995 section additional pension at age 60 without retiring or leaving

·         any additional contributions paid after the member reached normal pension age in their remedy section of the legacy scheme (age 60 or age 65) will be returned

An alternative option for members in respect additional contributions paid from 1 April 2022:

In recognition that not all members may have wanted to continue with a purchase of additional pension in their remedy section of the legacy scheme from 1 April 2022, regulation 18 provides the member with an alternative option in respect any additional contributions paid from that date.

The member may elect to cancel the corresponding legacy option from 1 April 2022 and, instead, continue with the purchase of additional pension (AP) in the 2015 scheme from that date. The original terms on which the purchase was made will apply.

Lowtrawler

I wrote to pensions to get advice on what is happening to the Additional Pension. This is their response:

THE SPPA have not included any additional pensions purchased in remedy period to date in any pensions

And these have not been rolled back to the 1995 automatically. 

These will only be included to Pensions and revised accordingly  once members have had Remedy statements  and Additional pension options and final  choices.

 I am unable to confirm  exactly what all the options on the Remedy Additional Pension choices letter will be these are Still to be finalised

 It is hoped these will be issued to members who purchased Additional pension in remedy period from March 2025 onwards

So, it looks as though the choices for Additional Pension and what to do regarding McCloud remains to be offered by the SPPA.