What about immediate detriment/rectification cases? Why can’t these be processed now the Bill has received Royal Assent?
It is accepted that affected members of the reformed pension schemes who have retired since 1 April 2015 or will retire before the remedy has been implemented, have an entitlement to be treated as a member of their legacy scheme for the remedy period if they wish.
However, giving effect to this entitlement before legislation is implemented creates complex issues, particularly where there are interactions with the tax system.
The PSPJOA 2022, together with changes being made through tax regulations using powers in the Finance Act will ensure a consistent approach and mitigate the risk of adverse tax impacts for members once they are commenced through scheme regulations.
These scheme regulations will be in place by October 2023 for all members and schemes may implement them earlier where it is possible to do so.
When will those who are suffering immediate detriment see their benefits amended?
Provision for the deferred choice will be made by 1 October 2023 for all active members who retire beyond this point. Schemes will also offer those who have already retired a choice of benefits for the remedy period as quickly as possible after scheme regulations are made.
Why can’t immediate detriment cases be processed before October?
It is accepted that members affected by immediate detriment have an entitlement to be treated as a member of their legacy scheme for the remedy period if they wish.
However, giving effect to this entitlement before legislation is implemented would create complex issues, particularly where there are interactions with the tax system. Instead processing cases from 1 October when scheme regulations take effect will ensure a consistent approach and mitigate the risk of adverse tax impacts for members.
If I retire before October 2023, what pension benefits will I receive?
Where members retire before the deferred choice is implemented in their pension scheme, they will initially receive benefits from their current scheme.
They will then be given a choice of benefits for the remedy period as quickly as possible after that and any increased entitlement will be backdated.
Is all of the legislation to remedy McCloud now in place?
No. There are still detailed changes that need to be made to scheme regulations. These will be made using the powers in the PSPJOA 2022 and need to be in operation by 1 October 2023 at the latest.
There are also some situations where changes to pension rights due to the McCloud remedy produce disproportionate tax results that cannot be resolved through powers provided in the PSPJOA 2022.
Therefore, changes will also be made to tax legislation to ensure that the remedy can be implemented smoothly. HMRC consulted on the first set of tax regulations from December 2022 to January 2023; these regulations were subsequently made and laid on 6 February 2023. Further tax regulations will be consulted upon, and finalised, ahead of implementation of the remedy.
Does the PSPJOA remedy the discrimination identified by the Court of Appeal?
Together with changes being made through tax regulations using the powers in the Finance Act and scheme regulations made under the Act, the PSPJOA will provide a remedy for all those affected by the discrimination identified by the Court of Appeal.
This remedy will apply equally to claimants in the employment tribunal and non-claimants and there is no need to make a claim to the employment tribunal to benefit from the changes.
Why doesn’t the remedy offer compensation for non-financial losses?
The remedy is intended to put scheme members back into the same financial position as if the discrimination had not occurred. This includes “contingent decision” provisions to allow schemes to provide compensation for financial losses where members can demonstrate they would previously have taken a different course of action were it not for the discrimination. If members feel they have suffered additional losses this would need to be taken up through the normal channels.
Why have some groups received settlement payments, will I get one?
The remedy is intended to put scheme members back into the same financial position as if the discrimination had not occurred and will apply equally to eligible members irrespective of whether they have lodged a claim in the Employment Tribunal. We are not able to comment on ongoing litigation.