{"id":51614,"date":"2025-01-27T20:01:45","date_gmt":"2025-01-27T20:01:45","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/the-mccloud-remedy-explained-how-it-impacts-on-public-sector-pensions\/"},"modified":"2025-01-27T20:01:45","modified_gmt":"2025-01-27T20:01:45","slug":"the-mccloud-remedy-explained-how-it-impacts-on-public-sector-pensions","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=51614","title":{"rendered":"The McCloud Remedy explained & how it impacts on public sector pensions"},"content":{"rendered":"


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Jonathan Tetsell ACA explains the McCloud remedy and what it potentially means for NHS and public sector workers’ pensions.<\/h2>\n

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In 2015 the government introduced reforms to most public sector pension schemes. The changes amounted to a shift from \u2018Final Salary\u2019 basis to a \u2018Career Average Earnings\u2019 basis.<\/span><\/p>\n

For those scheme members who were close to retirement, and also met some other criteria, they were protected in the final salary basis schemes. This meant they didn’t need to shift to the new career average earnings scheme at the time.\u00a0<\/span><\/p>\n

Subsequently a court of appeal ruled that these protections they were enjoying were in fact discriminatory against younger members of the scheme. The McCloud Remedy<\/a><\/span> was then put in place to make things fair and level up the playing field.\u00a0<\/span><\/p>\n

In this blog post you’ll find out more about what has happened, who this is relevant to, and what to do if you’re impacted by these pension changes along with the complex tax considerations<\/span> that could accompany them.\u00a0<\/span><\/p>\n

\"See<\/a><\/span><\/span><\/span><\/p>\n

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What is a final salary pension scheme?<\/span><\/h2>\n

A final salary pension scheme<\/span>, also known as ‘defined benefit<\/span>‘, is calculated by multiplying how long you’ve been a member for the scheme by your final salary. This guarantees you an income for the rest of your life based on your final salary.\u00a0<\/span><\/p>\n<\/div>\n

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What is a career average earnings pension scheme?<\/span><\/h2>\n

This way of calculating how much pension you receive is based on your salary over the entirety of your career. For each year that you work, you build up 1\/57th of your pensionable earnings in that year. Your pension is added together each year to build up your total career average retirement benefits. The running total can be re-assessed to also account for inflation or earnings growth. <\/span><\/p>\n<\/div>\n

The issue in this case is that the career average method<\/span> can often provide lower pay-outs compared to the final salary schemes.\u00a0<\/span><\/p>\n

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