Paul Griffiths, financial consultant for Wesleyan Financial Services, shares the latest developments in the ongoing ‘McCloud’ case and what it could mean for your retirement plans.
The government has once again come under scrutiny. It is facing further legal action in relation to this case from the Fire Brigade Union in regards to who will foot the bill of the remedy costs.
The question dentists who are part of the NHS pension scheme (NHSPS) need to think about in response is – will you contribute to the cost of the NHS pension discrimination case yourself and what should you do in response?
Recap on the NHS pension discrimination case
In April 2015, public sector pension schemes were reformed (including the NHSPS). Most members moved into new career average arrangements.
Following consultations with member representatives, transitional protections were put in place to protect those close to retirement. These protections meant that members within 10 years of retirement on 31 March 2012 would not move into the reformed schemes, usually referred to as the 2015 schemes.
It also meant that those between 10 and 13½ years from retirement would move to the reformed schemes, but later.
In December 2018, the Court of Appeal found that these transitional protections unlawfully discriminated against younger members of the judicial and firefighters’ schemes.
In July 2019 the government accepted that the judgment applied to all the main public service pension schemes, including the NHS.
The 2020 consultation was the government’s remedy to remove this discrimination from all public sector pension schemes.
In February 2021, the government confirmed it would proceed with the Deferred Choice Underpin (DCU) option. This was a way to remove the discrimination. Members could decide on their preferred section of the scheme upon retirement.
Who does it affect?
The DCU applies to the following:
- All public sector schemes including the NHS
- Dentists who were in the NHS before 31 March 2012 and on or after 1 April 2015. This includes members who were in service on 31 March 2012 and then took a qualifying break of less than five years. This includes members who left pensionable service, or who took their pension benefits, after 1 April 2015
What are the latest developments?
FT Adviser reported that the Fire Brigade Union has sent a formal letter. It argues the government’s admission that public sector scheme members of the 2015 scheme will be covering the cost to remedy the discrimination. Some think this will cost £2.5bn per year.
Members who were found to be discriminated against on basis of age would also still contribute as part of that section of the scheme.
There is still some uncertainty of what this will mean for individuals in terms of cost and method of contribution. And no doubt more details will come out in the coming months.
Above all – don’t be hasty
When updates in relation to the case, such as the Fire Brigade Union’s stance, arises it’s easy to jump to the conclusion that the NHSPS isn’t worth the hassle. But in reality, the scheme has substantial financial benefits.
By leaving the scheme, you might be at a financial disadvantage.
Speaking to a financial specialist that understands the complexities of the NHSPS and the McCloud case could help you make better informed choices to strengthen your financial position and help you on your road to retirement.
If you’re looking for help with this area, you can speak to a specialist dental financial consultant as part of a no-obligation financial review. Simply visit www.wesleyan.co.uk/dental or call 0800 316 3784.
