In 2015 the government made changes to the majority of public service pension schemes. These reforms didn’t apply to members closest to retirement, who stayed in their legacy schemes with ‘transitional protection’.
Members with full protection, those who were within 10 years of normal pension age in 2015, didn’t have to move to the reformed 2015 Scheme at all.
Members with tapered protection, those who were within 10, 13 and a half or 14 years of normal pension age in 2015, could stay in their existing scheme for longer than members without transitional protection.
The Court of Appeal later found that this discriminated against younger members in the judicial and firefighters’ schemes. The government accepted that this discrimination existed in all schemes where transitional protection was introduced. It is sometimes referred to as the McCloud judgment.
The government is removing this discrimination from all public service pension schemes and in July 2020, it published a consultation to look at how best to do this.
The consultation set out two ways of asking affected members to make a choice:
- in the near future – this is called the immediate choice exercise
- when you retire – this is called the deferred choice underpin (DCU)
The government published a consultation response in February 2021. The government has now decided to implement a ‘deferred choice underpin’ which was the preferred approach for the majority of respondents to the consultation.
Read more about the consultation findings on the government’s website.
When DCU will be introduced
The government will be introducing new legislation and intends for DCU processes to be in place by 1 October 2023 to support members to make a choice once they retire.
In some cases, members who are eligible to make a choice about their pension benefits will have already started to receive their benefits before the DCU is put in place.
This includes eligible members who have taken age retirement, ill health retirement, early or late retirement or who have died on or after 1 April 2015.
These members will be contacted as soon as possible once the required legislation has been put in place by the government and by the NHS Pension Scheme.
Members will be given the information they need to choose between receiving benefits from the 1995/2008 Scheme or 2015 Scheme for any service between 1 April 2015 and 31 March 2022.
The NHS Pension Scheme will backdate the member’s decision to the date their pension benefits were first paid. In some cases, this might mean members are due an extra payment, and this will be paid to them as soon as possible after they’ve made their choice.
Where an eligible member has died, their beneficiaries or their personal representative will be contacted to make a choice.
There are also a number of areas where further clarification is needed before NHS Pensions can contact these members, such as how the changes will impact tax and death benefits. We’re working closely with government to clarify these.
For now, all our processes remain the same and there is nothing members need to do. We’ll contact all affected members directly when they need to take action.
Any queries about members’ pension benefits at this time will be handled based on their current scheme membership.
Supporting your employees
It’s our priority to help members who are affected to choose their pension scheme benefits with confidence.
We’re working closely with the Department of Health and Social Care (DHSC) to create the processes and information they’ll need to understand their alternative benefits for the remedy period ahead of retirement. This will include the introduction of a pension modeller.
We’re also creating resources to help you to support your members, which will be available on this website.
We’ll keep you updated on our progress and timescales through this website and our monthly employer newsletter.
Finding more information
Visit our Employer Hub for copies of our monthly employer newsletter.
If you have any questions, you’ll find more information on our knowledge base. We update this regularly.
The main contacts for each organisation receive this automatically to the email address we hold on our records.
If you are not the main pensions contact and would like to receive the newsletter, email firstname.lastname@example.org with your name, organisation and email address.