McCloud Judgment and Remedy FAQs - Moving into alpha April 2022

NICS Pension Schemes - McCloud Judgment Remedy FAQs

How does this change affect me financially?

Right now, we’re waiting for the policy detail and the legislation around 2015 Remedy to be passed. We can’t tell you what (if any) financial impacts this will have on your pension for any contributions made between 1 April 2015 and 1 April 2022 until after that happens. We anticipate this will be after October 2023.

We can say that you’ll be given a choice for how you would like your benefits to be calculated for that period.

Will I end up with two separate pension transactions every month - one for Classic and one for alpha?

Once you retire you will receive one pension payment – however this will consist of your pension accrued in both your legacy scheme and alpha scheme once you have collected them.

Will I receive a closing statement?

Closing statements are not issued, however an Annual Benefit Statement will be issued in a similar timetable to previous years which will cover your legacy benefits up until the end of March 2022.

Will being in alpha mean higher contribution rates?

For most members, the contribution rates will be the same as in the legacy schemes. There are a few exceptions to this:

  • If you earn in excess of the earnings cap (currently £172,800 per year) you’ll see an increase in pension contributions. Under the legacy scheme (with the exception of Nuvos), earnings on which contributions are paid are capped to this level, whereas there is no such cap in alpha.
  • If you have in excess of 45 years of reckonable service in Classic, Classic Plus or Premium you may have ceased to pay member contributions, and will resume paying contributions when you move into alpha.

Does moving to alpha affect my annual tax liabilities?

We cannot tell you how you will be impacted at this time but your tax position will become clearer in time and there is nothing for you to do at the moment.

Does added years contributions stop at transition into the new scheme?

Your added years contract will continue until your 60th birthday.

Does moving to alpha affect my added pension contributions?

No. Added pension contributions you are already making into a legacy scheme can continue even after you have moved to alpha.

However, you will NOT be able to:

  • Make any lump sum purchases of added pension in the legacy scheme after you move to alpha
  • Set up any new periodical contribution arrangements retrospectively in the legacy scheme

Does moving to alpha on 1 April 2022 mean that my last contribution to my cash lump sum will be taken from my salary on 31 March 2022? In other words, my lump sum at end of March, will not increase further from that date?

If you are a member of Classic you will have an automatic lump sum worth 3 times your Classic pension which will be linked to your final salary.  Therefore the salary at retirement will be used to calculate your Classic pension and lump sum.  There is no automatic lump sum with alpha, but similar to other schemes such as Premium and Nuvos, you can commute alpha pension for lump sum.

I am moving to alpha on 1 April 2022, but I am already planning to retire in 2022, what do I need to do?

There’s nothing extra you need to do and nothing relating to 2015 Remedy will prevent you from retiring as planned.

If you are retiring before 1 April 2022, your pension will be made up of benefits built up in your legacy scheme. We will contact you after October 2023 to offer you a choice between your legacy benefits and alpha benefits built up between 1 April 2015 and 1 April 2022.

If you are retiring between 1 April 2022 and 1 October 2023, your pension will be made up of benefits built up in your legacy scheme and the alpha scheme. We will contact you after October 2023 to offer you a choice between your legacy benefits and alpha benefits built up between 1 April 2015 and 1 April 2022.

Is there a minimum number of years that a civil servant who was previously in the PCSPC(NI) must be in alpha to receive an alpha pension?

No. Qualifying service in the PCSPS(NI) counts towards qualifying service in alpha. So for example if someone joined Nuvos in 2010, the qualifying service between 2010 and 2022 will also count as qualifying service in alpha. The total service must be at least 2 years.

I built up over 42 years in Classic by 31/03/22. I intend on retiring early 2023, when I turn 60, which would mean I would have accrued 11 months in alpha.  What are my options regarding 11 months in alpha?

As we alluded to earlier, qualifying service in the PCSPS(NI) also counts towards qualifying service in alpha. 

After 1 April 2022, when someone reaches their NPA in their legacy scheme, they can retire and put those benefits into payment without reduction.  In relation to any accrued alpha pension, they can take it on an actuarially reduced basis, as it is being paid for longer, or defer putting the pension into payment until a date of their choosing, including up to or beyond their NPA in the alpha scheme.  

Having read the guidance, it looks like if I retire before October 2023, then all salary/pension contributions are treated as being in the previous scheme (like Classic or Premium). Is that true?

If you retire before the necessary scheme changes are in place, your benefits will be processed as they are now. For example, if you were a fully protected member and won’t move to alpha until 1 April 2022, all the benefits you’ve accrued until 31 March 2022 will be in your previous PCSPS(NI) scheme and benefits accrued from 1 April 2022 will be calculated in alpha. As soon as the necessary scheme changes have been completed you will receive a retrospective choice for the remedy period, (April 15 - March 22) backdated to the date of retirement.

I have just over 45 years’ service completed in the Classic pension scheme and I am over 60 years of age.  What happens if I retire in June/July 2022? Will my calculations for retirement still be based on final salary or will they be calculated differently with the move over into the alpha scheme on 1 April?

The 45 years Classic service is secure and on retirement on June/July 2022 the Classic element will be based on 45 yrs service and the final pensionable earnings the best of last 3 years ending June/July.

On moving to alpha you will start to accrue an alpha pension. So for the period April to June/July (approx. 122 days) you will have accrued 2.32% of your earnings for this period as an alpha pension. You may choose to lift this alpha pension on a reduced basis at the same time as you lift your Classic element on your retirement or leave/defer the alpha to a later time closer to your Scheme Pension Age (SPA) or wait until your SPA. The closer to SPA the lesser the actuarial deduction for early retirement which will incur. A refund of alpha contributions is not an option.

I am a member of Classic and I will be moving to alpha on 1 April 2022.  I do not wish to work until my State Pension Age.  If I retire and claim my Classic benefits after age 60, do I need to take my alpha pension early at a reduced rate?

No.  You are under no obligation to claim your alpha pension at the same time as your legacy benefits. If you leave employment as well as alpha, and you are over your legacy Scheme Pension Age (age 60 for Cassic, Classic Plus and Premium and age 65 for Nuvos), you can get your legacy pension paid immediately. Your alpha pension will be preserved unless you are over the minimum pension age and you claim it early. The alpha pension will be reduced for early payment.

What are the exceptions to the final salary link from my legacy scheme?

If you have a break in service of five years or more and rejoin the alpha scheme when you return, you won’t be eligible to retain a final salary link from the legacy scheme all the way through to retirement.

Will this change be reflected on my 2022 Annual Benefit Statement (ABS)?

No. The ABS that you receive reflects the benefits up to 31 March in that year.

You will first see your alpha benefits in the 2023 ABS.

Will future Annual Benefit Statement’s (ABS) still forecast my Classic and alpha pension benefits at age 65 in the same way my Classic ABS did?

Your ABS will reflect your accrued benefits up until the end of March for the previous scheme year. As you would still have been in classic as at 31 March 2022, this year’s ABS will still contain projection for Classic but as we know you will be an alpha member from 1 April 2022, the projection will not apply. The guidance notes on the ABS will explain this. The ABS will continue to issue in the normal format until the retrospective remedy is implemented. Projections to normal retirement age are not provided for alpha due to the uncertainties involved but there is a Pension Projector Calculator on the website that members can use.

Are there any calculators I can use to see the impact of this change on my pension?

Our current member calculators cannot take into account changes from the 2015 Remedy. 

You can however, use the calculators to calculate your pension benefits based on the pension you have already built up in the legacy and alpha schemes.

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