McCloud Remedy explained: what it means for your pension

If you’ve spent any of the last few years in the NHS, teaching in a state school, serving in the armed forces or police or fire service, or working as a civil servant or in local government, the word “McCloud” has probably found its way into your inbox. There’s a decent chance you set the letter aside thinking you’d deal with it later.

This is later. Here’s what’s actually going on, in plain English, what it means for your pension, and what (if anything) you need to do about it. For the wider picture of how UK public sector pensions fit together, see our primer on UK public sector pensions.

What McCloud actually was

In 2015 the government overhauled the major public service pension schemes. The new schemes were less generous than the old ones. Most importantly, they swapped final-salary calculations (your pension based on your last few years of pay) for Career Average Revalued Earnings, or CARE (your pension based on every year of pay, revalued each year for inflation).

There was meant to be a softer landing for people closest to retirement. Older members, broadly those within ten years of normal pension age in April 2012, stayed in the legacy scheme. Younger members were tipped straight into the new one. People in the middle had a tapered transition.

On 20 December 2018, the Court of Appeal ruled in two linked cases (McCloud, brought by judges, and Sargeant, brought by firefighters) that protecting only older members was age discrimination under the Equality Act. Younger members were being treated worse for no reason except their age.

The government accepted the judgment. The Public Service Pensions and Judicial Offices Act 2022 set the legal scaffolding for fixing it across every affected scheme.

Who’s affected, and who isn’t

The Remedy applies to members of:

• NHS Pension Scheme
• Teachers’ Pension Scheme
• Civil Service Pension Scheme (alpha)
• Local Government Pension Scheme (LGPS)
• Police Pension Scheme
• Firefighters’ Pension Scheme
• Armed Forces Pension Scheme
• Judicial Pension Scheme

The basic test is straightforward: were you in one of these schemes at any point during the remedy period (1 April 2015 to 31 March 2022)? If yes, you’re probably affected.

There’s a wrinkle for the LGPS. It used a slightly different protection mechanism called the “underpin”, and that’s being remedied separately, in the same spirit.

Who isn’t affected:

• People who joined a public sector scheme for the first time on or after 1 April 2022. The reformed scheme applies and there’s nothing to roll back.
• People who’d already retired before the 2015 reforms. You stayed on legacy throughout.
• People who never had transitional protection AND who weren’t disadvantaged by its absence. You may still get a statement, but the numbers are likely similar either way.

The Remedy: rollback, then choice

The fix has two stages.

Stage one is the rollback. Each affected member’s service for the remedy period (those seven years from April 2015) is rolled back into the legacy scheme. For that window, you’re treated as if 2015 never happened. Contributions get recalculated. Some members owe money to the scheme. Others are owed money by it. It depends on whether the legacy scheme was more or less expensive than what you actually paid.

Stage two is the Deferred Choice Underpin. The acronym is DCU. You’ll see it a lot. When you eventually retire, transfer out, take your benefits, or die in service (in which case the choice falls to your beneficiaries via the scheme administrator), the scheme calculates two figures for the remedy period:

• What your remedy-period benefits would be worth under the legacy scheme rules
• What they’d be worth under the reformed scheme rules

You take the better one.

The choice only applies to the seven-year remedy window. Anything you accrued before April 2015 follows the legacy rules automatically. Anything from April 2022 onwards follows the reformed rules automatically. It’s just the middle slice that’s up for grabs.

In practice the choice is usually obvious. Most affected members will be better off taking the legacy scheme for that period, because the legacy schemes were generally more generous. But not always. If you took unpaid leave during those years, changed your working pattern, or had unusual pay trajectories, your numbers might tilt the other way. Don’t assume.

The Remedial Service Statement

What you’ll actually receive, through the post or via your scheme’s online portal, is a Remedial Service Statement. RSS for short. For a section-by-section walkthrough of the document, see our companion guide on how to read your McCloud RSS. It lays out:

• Your service in each scheme during the remedy period
• The contribution position: what you paid versus what you should have paid under the rolled-back scheme
• An indicative comparison of legacy vs reformed benefits for the period
• Any tax implications

That’s the theory. Reality has been bumpier.

Schemes started issuing statements from 2023-24, in priority order: people who’d already retired during the remedy period first, then others nearing retirement, then everyone else. The intention was for active-member statements to follow from spring 2025 onwards. In practice, delivery has slipped across nearly every scheme.

The NHS is the most visible case. NHSBSA has missed multiple statutory deadlines and, as of May 2026, still cannot give a timetable for when statements will be issued. An independent review chaired by Lisa Tennant (Independent Chair of the NHS Pension Board) delivered an interim report in December 2025; the final report and new statutory deadlines were anticipated for early 2026 but, at the time of writing, had not yet been published. The Armed Forces scheme has missed its 31 March 2026 deadline for complex Remediable Service Statements, effectively all the outstanding ones, and has yet to publish a new completion date.

The Civil Service is the most acute current case. Capita took over administration on 1 December 2025 and inherited a backlog that the Cabinet Office Permanent Secretary later revised upwards from 86,000 to around 120,000 cases. Roughly 8,500 newly retired civil servants were left without their pensions at the height of the crisis. A recovery plan led by Angela MacDonald, Deputy Chief Executive at HMRC, is targeting a return to normal service levels by the end of June 2026. HM Treasury has acknowledged that every major public sector scheme is facing significant risk against the original delivery plan.

If you’ve already retired during the remedy period and you haven’t been offered an Immediate Choice, chase your scheme. That cohort was meant to be first.

If you’re still working, the most likely answer right now is: it’ll arrive when it arrives. Frustrating, but the alternative is the scheme rushing the calculations, which is much worse.

When your statement does land, sit down with it. Check the service dates. Check the salary figures. Some of these calculations stretch back nearly a decade and errors do happen. If anything looks wrong, query it with your scheme administrator promptly. It’s much easier to fix things while the records are still fresh than five years from now.

Tax: yes, this is where it gets messy

Three things to know.

First, contribution adjustments. Where the legacy scheme would have charged different rates than what you paid, your scheme will recalculate. You’ll either owe them money or they’ll owe you. This is processed automatically; you don’t need to do anything.

Second, Annual Allowance charges. The Annual Allowance limits how much your pension can grow tax-efficiently each year. If you previously paid AA charges based on your reformed scheme growth, the rollback changes those figures retrospectively. HMRC has a specific framework so you don’t end up worse off as a result of the Remedy. If you’ve paid AA charges in any of the remedy years, look out for revised pension input amounts from your scheme. For a full walk-through of who gets a refund, who owes more, and how the framework actually works, see McCloud and tax: refunds, charges, and what HMRC actually does.

Third, the Lump Sum Allowance (LSA) and the Lump Sum and Death Benefit Allowance (LSDBA). The Lifetime Allowance was abolished on 6 April 2024 and replaced by these two separate allowances. The McCloud changes can affect how your benefits are valued against them, particularly if you’ve taken any lump sums during the remedy period. Most members won’t be near these limits. High earners with long service should check their numbers.

Most of this is automated. The scheme handles the recalculation; you don’t file complex tax returns. But if you’ve previously paid AA charges through Scheme Pays (where the scheme settles the charge in exchange for a permanent reduction in your eventual pension) or directly to HMRC, make sure the McCloud adjustment finds its way back to you. It’s an easy thing to slip through the cracks.

What to do now

For most active members: not much. Wait for your statement. Read it carefully when it arrives. Keep it filed somewhere you’ll find it again. If anything looks wrong, query it.

For retired members: you should already have had an Immediate Choice if you retired during the remedy period. If you didn’t, chase your scheme.

For everyone: keep your address and email up to date with your scheme. If they can’t reach you, they can’t tell you anything.

What not to do

Don’t panic.

Don’t pay anyone offering to “manage your McCloud claim”. There is no claim to manage. The Remedy is automatic; your scheme administrators are doing the recalculations as a legal duty. Anyone charging you a fee for help with this is selling you nothing, or worse, a regulatory hazard.

Don’t make irreversible pension decisions, like transferring out, taking early retirement, or drawing your pension, based on an indicative figure in an RSS. The number on the statement is a snapshot, often using estimated future service. Your actual benefits depend on your full service to date and the rules at the time you take them. If you’re considering anything irreversible, get a fresh illustration from your scheme that accounts for McCloud.

Don’t accept the first explanation that doesn’t make sense. Schemes are processing millions of calculations. Errors happen. If something looks wrong, ask. If the answer doesn’t add up, ask again.

Where to get help

First port of call: your scheme administrator. They have your full record and the legal duty to put the Remedy into effect for you.

For free, impartial guidance, MoneyHelper (run by the Money and Pensions Service) covers pensions including McCloud at a member level.

For tax questions, HMRC has dedicated McCloud guidance, and your scheme’s communications should explain how to query specific charges.

For complaints, schemes have an Internal Dispute Resolution Procedure (IDRP). Once you’ve exhausted that, you can escalate to the Pensions Ombudsman.

Common questions

Pension Plain’s take

McCloud is, fundamentally, a fix for something that was unfair. For most affected members, when the dust settles, you’ll come out a few percent ahead of the reformed-only outcome. For some members the gain is materially more.

The administration is genuinely complicated, and slower than anyone hoped. The schemes are doing the heavy lifting. Your job is much smaller: read what arrives when it arrives, check it for accuracy, and don’t let an indicative figure on a statement push you into pension decisions you wouldn’t otherwise make.