The McCloud remedy gives affected public-service pension members a choice between two ways of valuing the same seven years of service. Most guides stop at describing the choice. This one does the arithmetic: what the two sides of a Remediable Service Statement are actually made of, which published figures go into each, and two worked examples where the answer comes out differently.
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Why McCloud exists
In 2012 the Government reformed the major public-service pension schemes, replacing final-salary defined benefits with Career Average Revalued Earnings (CARE) accrual from April 2015. The reforms protected members within 10 years of normal pension age, who kept their legacy final-salary scheme. Younger members were moved to CARE.
The Court of Appeal ruling in McCloud and Sargeant (2018) found that protecting the older members was unlawful age discrimination against the younger ones. The remedy gives every affected member a choice of which scheme's rules value their service for the remedy period.
The remedy period is not the same date range in every scheme
For most schemes the remedy period is 1 April 2015 to 31 March 2022. Two exceptions matter:
- Local Government Pension Scheme (England and Wales): 1 April 2014 to 31 March 2022.
- Certain agency schemes: 1 April 2016 to 31 March 2022.
Source: How the public service pension remedy affects your pension (HM Treasury / HMRC collection).
Who is affected
There are three conditions and all of them have to hold. HM Treasury's guidance puts them as: you "were members, or eligible to be members, of a public service pension scheme on 31 March 2012"; you "were members of a public service pension scheme between 1 April 2015 and 31 March 2022"; and "the two periods above were continuous (or treated as continuous under the scheme regulations, including those with a qualifying break in service of less than 5 years)" (guidance on the public service pension scheme consultation response).
Two parts of that are routinely dropped. Active membership on 31 March 2012 is not the test - being eligible to be a member counts. And the continuity limb is a real condition: a break of five years or more between the two periods takes you out of scope even if both periods are otherwise there.
The schemes include the NHS Pension Scheme, the Teachers' Pension Scheme, the Civil Service scheme, the Police and Firefighters' schemes, the Armed Forces Pension Schemes, the Judicial Pension Scheme and the LGPS.
If you first joined one of these schemes after 31 March 2012 - a "fresh starter" - you are not affected. Your service is entirely in the reformed scheme.
What happened on 1 October 2023
The remedy was not applied as a fresh calculation on top of the old one. On 1 October 2023 the affected service was rolled back. NHSBSA puts it plainly: for a member with no protection or with tapered protection, "any continuous membership you had in the remedy period (1 April 2015 to 31 March 2022) will be moved into your legacy scheme" (NHSBSA, rollback of remedy period service).
So the legacy scheme is the default. The reformed scheme is the thing you may choose instead, not the thing you have to escape.
Deferred choice, immediate choice
- If you had not taken your benefits by 1 October 2023, you make a deferred choice - at the point your pension comes into payment. HM Treasury's guidance: "When payment of pension benefits commences for those members... they will then receive a choice of which pension scheme benefits they would prefer to take for the period" (guidance on the consultation response).
- If you had already taken benefits, you get an immediate choice, offered by your scheme with its own response deadline.
The advantage of the deferred choice is that it is made when the inputs are known. The disadvantage is that nothing about it is settled today, which is why the numbers below matter: they show which way the choice is leaning and what would have to change to move it.
The LGPS remedy is not a choice at all. It is an underpin: the fund compares the two figures and pays the better one automatically. "If you qualify for underpin protection, you will be protected even if you have already left the LGPS or taken your pension," and "your pension fund must review all the pensions it is paying to work out which ones will increase" (LGPS, What is the McCloud remedy?). If you are in the LGPS, the rest of this guide explains how the comparison is made, but you do not have a decision to take.
What a Remediable Service Statement actually shows
A Remediable Service Statement (RSS) is the document that makes the choice answerable. It is not advice and it does not recommend. It sets out, for the remedy period only:
- the pensionable service and the final pensionable pay that the legacy calculation uses;
- the annual pension the legacy rules produce, and any automatic lump sum that comes with it;
- the annual pension the reformed CARE rules produce, after revaluation;
- the difference in tax-free cash between the two.
Everything else on your record - service before 1 April 2015, service after 31 March 2022 - is outside the remedy and is unaffected by the choice.
How the two sides are calculated
The two sides are not two versions of one sum. They are different formulas fed by different inputs.
The legacy side: final salary
Final-salary accrual multiplies one pay figure by the number of years. In the NHS 1995 Section, NHSBSA states the formula as: "Pensionable pay multiplied by pensionable membership multiplied by 1/80 equals your pension", with a separate "Pensionable pay multiplied by pensionable membership multiplied by 3/80 equals your retirement lump sum", where pensionable pay is the "best of your last 3 years pensionable pay" (NHSBSA, how an NHS pension is calculated in the 1995 and 2008 Sections).
The critical point for the remedy: if you are still in service, that "last 3 years" is your last three years, not the last three years of the remedy period. NHSBSA: "If you have a final salary link for your 1995/2008 Scheme benefits, you keep it as long as you do not have a break in membership of more than 5 years" (Your NHS Pension after 1 April 2022). The legacy value of your remedy-period service therefore keeps rising with every pay rise you get between now and retirement.
The reformed side: career average, revalued
CARE accrual banks a slice of each year's pay and then revalues each slice separately. Two published numbers set the size of the slice and the size of the revaluation:
| Scheme | Accrual each year | In-service revaluation | Normal pension age |
|---|---|---|---|
| NHS 2015 | 1/54th | CPI + 1.5% | State Pension age, or 65 if later |
| Teachers' career average | 1/57th | Treasury Order + 1.6% | State Pension age |
| Civil Service alpha | 2.32% of earnings | In line with inflation as advised by HM Treasury | State Pension age, or 65 if later |
| AFPS 15 | 1/47th | Average Weekly Earnings index | 60 |
Sources: NHSBSA, how an NHS Pension is calculated in the 2015 Scheme ("The accrual rate is 1/54th", "This is currently Consumer Prices Index (CPI) + 1.5% each year", "revalued on 6 April of the following year"); Teachers' Pensions, understanding how your career average pension builds up ("1/57th of your pensionable earnings", revalued "using a rate published by HMT (Treasury Order) plus 1.6%"); Civil Service Pension Scheme, alpha contributions and benefits ("2.32% of pensionable earnings each scheme year"); AFPS 15: Your Scheme Explained ("the MOD adds 1/47th of your annual pensionable earnings for that year", "The NPA for AFPS 15 is 60").
Notice that the revaluation basis differs. NHS and Teachers' members revalue on prices plus a scheme addition; AFPS 15 revalues on earnings. Applying the wrong one is the commonest way a DIY estimate goes wrong.
Accrual rates for the Police and Firefighters' schemes, and for Civil Service classic, are set by those schemes' own regulations and are not restated here: we could not verify them against the scheme's own published member material at the time of writing, and a pension figure quoted from memory is worse than no figure. Use your scheme's own guide.
The revaluation figures used below
For prices-based schemes the annual figure comes from the Public Service Pensions Revaluation Order made each year under section 9 of the Public Service Pensions Act 2013. These are the orders covering the remedy period:
| Scheme year | Change in prices | Statutory instrument |
|---|---|---|
| 2015/16 | −0.1% | SI 2016/438 |
| 2016/17 | 1.0% | SI 2017/242 |
| 2017/18 | 3.0% | SI 2018/338 |
| 2018/19 | 2.4% | SI 2019/455 |
| 2019/20 | 1.7% | SI 2020/230 |
| 2020/21 | 0.5% | SI 2021/276 |
| 2021/22 | 3.1% | SI 2022/215 |
Both worked examples below value each side at 6 April 2022 - the point at which the last in-remedy revaluation has been applied. That is the basis on which the two options sit side by side on an RSS. Both figures keep moving afterwards, and the section after the examples says which way.
Worked example 1: a nurse whose pay grew steadily
Priya joined the NHS in 2006, so she is in the 1995 Section for her pre-2015 service and within scope of the remedy. Her pensionable pay for the seven remedy years, and her pay at the end of the period, are the inputs. The pay figures are illustrative; the accrual and revaluation rates are the published ones above.
Legacy side - NHS 1995 Section. Seven years at a final pensionable pay of £46,000:
- Pension: 7/80 × £46,000 = £4,025.00 a year
- Automatic lump sum: 21/80 × £46,000 = £12,075.00
Reformed side - NHS 2015 Scheme. Each year banks 1/54th of that year's pay, then that slice is revalued at CPI + 1.5% for every year from the year it was earned to 6 April 2022. The "factor" column is the product of those annual uplifts.
| Scheme year | Pensionable pay | 1/54th banked | Revaluation factor to 6 Apr 2022 | Value at 6 Apr 2022 |
|---|---|---|---|---|
| 2015/16 | £31,000 | £574.07 | 1.2425 | £713.30 |
| 2016/17 | £31,500 | £583.33 | 1.2254 | £714.80 |
| 2017/18 | £32,000 | £592.59 | 1.1955 | £708.43 |
| 2018/19 | £33,500 | £620.37 | 1.1440 | £709.71 |
| 2019/20 | £35,000 | £648.15 | 1.1011 | £713.65 |
| 2020/21 | £38,000 | £703.70 | 1.0669 | £750.80 |
| 2021/22 | £46,000 | £851.85 | 1.0460 | £891.04 |
The first row is 1/54 × £31,000 = £574.07, and the last is 1/54 × £46,000 = £851.85. Adding the revalued column:
£713.30 + £714.80 + £708.43 + £709.71 + £713.65 + £750.80 + £891.04 = £5,201.73 a year.
The comparison. £5,201.73 − £4,025.00 = £1,176.73 a year more from the reformed scheme, against a £12,075.00 lump sum the legacy scheme gives and the reformed one does not.
Those two are comparable, because the NHS Scheme will sell you a lump sum out of pension at a published rate: "The rate of exchange is £12 lump sum for every £1 of annual pension commuted" (NHSBSA, can I commute part of my pension?). Buying the same £12,075.00 of cash out of the reformed pension costs 1/12 × £12,075.00 = £1,006.25 a year, leaving £5,201.73 − £1,006.25 = £4,195.48. Against the legacy pension of £4,025.00 that is still £4,195.48 − £4,025.00 = £170.48 a year better, with the same lump sum in hand.
On these figures the reformed scheme wins - despite 1/80 accrual sounding more generous than 1/54, and despite a 48% pay rise across the period.
1/80 of a single final salary is a bigger slice per year than 1/54 of an average one only if the final salary is far enough above the average. It is the ratio of the two accrual rates that sets "far enough", not intuition: 80 ÷ 54 = 1.48. Priya's final pay was 1.15 times her revaluation-adjusted average, not 1.48 times, so the reformed side was always going to be ahead at this date.
Worked example 2: a teacher who went from the main scale to headship
Daniel was on the main pay scale in 2015 and a secondary head by 2022. He is in the final salary arrangement with a normal pension age of 60, so his legacy accrual is 1/80th with an automatic lump sum of three times the pension (Teachers' Pensions, calculating benefits).
Legacy side - final salary, NPA 60. Seven years of service valued on a final pensionable pay of £95,000, which is his 2021/22 pay in the table below and not an average of the seven years:
- Pension: 7/80 × £95,000 = £8,312.50 a year
- Automatic lump sum: 21/80 × £95,000 = £24,937.50
Reformed side - career average. 1/57th of each year's pay, revalued at the Treasury Order figure + 1.6%:
| Scheme year | Pensionable pay | 1/57th banked | Revaluation factor to 6 Apr 2022 | Value at 6 Apr 2022 |
|---|---|---|---|---|
| 2015/16 | £38,000 | £666.67 | 1.2510 | £833.99 |
| 2016/17 | £39,000 | £684.21 | 1.2325 | £843.29 |
| 2017/18 | £42,000 | £736.84 | 1.2013 | £885.14 |
| 2018/19 | £48,000 | £842.11 | 1.1484 | £967.10 |
| 2019/20 | £58,000 | £1,017.54 | 1.1043 | £1,123.64 |
| 2020/21 | £70,000 | £1,228.07 | 1.0690 | £1,312.79 |
| 2021/22 | £95,000 | £1,666.67 | 1.0470 | £1,745.00 |
£833.99 + £843.29 + £885.14 + £967.10 + £1,123.64 + £1,312.79 + £1,745.00 = £7,710.95 a year.
The comparison. £8,312.50 − £7,710.95 = £601.55 a year more from the legacy scheme, plus a £24,937.50 automatic lump sum the career average arrangement does not pay. Here the legacy side wins on both counts, and it is not close once the lump sum is counted.
The difference between Daniel and Priya is not that one is a teacher and one is a nurse. It is that Daniel's final pay was 1.51 times his revaluation-adjusted average pay and the crossover for his scheme pair is 80 ÷ 57 = 1.40.
The crossover, instead of a rule of thumb
Both examples are the same inequality with different numbers in it. Legacy accrues one slice of final pay per year; career average accrues one slice of each year's revalued pay. Write the revaluation-adjusted average of your remedy-period pay as Ā - that is, revalue each year's pensionable pay to the comparison date and take the mean. Then the legacy side beats the reformed side on annual pension alone when:
final pensionable pay ÷ Ā is greater than (legacy denominator ÷ reformed denominator).
That ratio is fixed and public for each scheme pair:
| Scheme pair | Crossover ratio |
|---|---|
| NHS 1995 (1/80) vs NHS 2015 (1/54) | 1.48 |
| NHS 2008 (1/60) vs NHS 2015 (1/54) | 1.11 |
| Teachers' final salary NPA 60 (1/80) vs career average (1/57) | 1.40 |
| Teachers' final salary NPA 65 (1/60) vs career average (1/57) | 1.05 |
An older version of this guide carried a "final salary more than 30% above your average remedy-period salary" rule. That is wrong in both directions: it is far too generous to legacy for an NHS 1995 member, where the crossover is 48%, and far too harsh for a Teachers' NPA 65 member, where it is 5%. Use your own scheme's two accrual rates.
Three things the crossover deliberately leaves out, all of which can reverse it:
- The automatic lump sum. Where the legacy scheme pays one, it lowers the crossover - in example 1 it closed £1,176.73 of a gap down to £170.48.
- The final-salary link. The legacy figure is not fixed. It tracks your pensionable pay all the way to retirement, while the reformed figure only revalues. A promotion in 2030 raises one side of the comparison and not the other.
- Normal pension age. The NHS 1995 Section pays unreduced at 60; the 2015 Scheme pays unreduced at State Pension age, or 65 if later (NHSBSA, normal pension age). A legacy pension that is smaller per year but payable several years earlier is not obviously the worse one.
What the choice costs in tax
Pension income is taxed as income, and the difference between the two options is taxed at your marginal rate in the year you receive it. Using the 2026/27 rUK figures the site's own engine runs on (src/lib/tax/uk-2026-27.ts: personal allowance £12,570, basic rate 20% to £50,270, higher rate 40% to £125,140, additional rate 45% above):
Daniel's £601.55 a year of extra legacy pension, on top of other retirement income that keeps him inside the basic-rate band, is taxed at £601.55 × 20% = £120.31, leaving £601.55 − £120.31 = £481.24 net. If the same difference fell in the higher-rate band it would be taxed at 40% instead.
Two things do not bite on that difference. The first is National Insurance: pension income is not earnings and bears no National Insurance at any age, so the extra pension costs nothing in NI whether it starts before or after State Pension age. (The separate and often-confused point is that most people stop paying NI on earnings after reaching State Pension age: "Most people stop paying National Insurance contributions after reaching State Pension age", GOV.UK, tax and National Insurance after State Pension age. That rule is about wages, not about the pension.) The second is income tax on the automatic lump sum, which is paid free of income tax as a pension commencement lump sum within the lump sum allowance of £268,275 that replaced the Lifetime Allowance from 6 April 2024: "Individuals are entitled to a lump sum allowance of £268,275 unless they have a protected right to a higher lump sum allowance" (HMRC Pensions Tax Manual PTM171000).
Annual Allowance: the part that has already happened to you
Moving service between schemes changes the Pension Input Amount for each remedy year, and the Annual Allowance is tested against the Pension Input Amount, not against contributions. The Annual Allowance is £60,000, tapering for those with threshold income over £200,000 and adjusted income over £260,000 (GOV.UK, tax on your private pension: annual allowance).
Because the 1 October 2023 rollback changed the input amounts retrospectively, schemes issue a remediable pension savings statement so affected members can revisit the position. The current deadlines are set out in HMRC's remedy newsletters: the scheme pays election deadline for affected active and deferred members is 6 July 2027, with until 5 July 2032 to amend a scheme pays notice (Newsletter on the public service pensions remedy, June 2026).
For consultants, head teachers, senior civil servants and senior officers, this is the part of the remedy with real money in it in the short term, and it is the part with a deadline.
Lifetime Allowance: abolished, but not finished
The Lifetime Allowance was abolished from 6 April 2024 and replaced by the lump sum allowance and the lump sum and death benefit allowance. Members who crystallised benefits before that date may have paid LTA charges on a benefit value the remedy has since changed. Where that produces a refund, schemes process it centrally; in most cases no member action triggers it. If you took benefits before 6 April 2024 and your remedy position has since moved, ask your administrator to confirm the LTA position was revisited.
What members should do now
For most active members the remedy needs no action today. The legacy scheme is the default, and the choice is deferred. But:
- Read the RSS when it arrives, and check the two figures against the arithmetic above - the accrual rates and revaluation rates are public and your pay figures are on your payslips.
- Keep the RSS and everything that came with it. At retirement it is the evidence.
- If you took benefits before 1 October 2023, contact your scheme to confirm your immediate-choice position and its deadline.
- If you have any Annual Allowance history in the remedy years, do not let the 6 July 2027 scheme pays deadline pass unexamined.
- Check annual benefit statements issued after the rollback reflect the corrected position.
When to involve a pensions specialist
The remedy is routine administration for most members. A specialist earns their fee when:
- you are within about five years of retirement and the two figures are close;
- you have Annual Allowance or pre-2024 Lifetime Allowance history that the remedy has moved;
- you hold ill-health, protected-pension-age or special-status rights that interact with the choice;
- you are considering transferring out of a public-service scheme.
Use a regulated, FCA-authorised adviser with public-service scheme experience. The Government has not designated providers.
Where to find your scheme's information
- NHS Pension Scheme - NHSBSA member website.
- Teachers' Pension Scheme - Teachers' Pensions website.
- LGPS - your administering authority.
- Civil Service - MyCSP.
- Police - your force's pension administrator.
- Firefighters - your Fire and Rescue Authority's pension administrator.
- Armed Forces - Veterans UK / Defence Business Services, via armed forces pensions on GOV.UK.
Your own RSS is the authoritative figure. Everything above tells you how to read it and whether it looks right.
More military pay guides
Serving or ex-Forces? Start at the UK Armed Forces pay, pensions and payslips hub, or go straight to:
- Armed Forces Pension AFPS 15 - the reformed scheme on the CARE side of the remedy choice.
- Annual Allowance for senior officers - McCloud compensation for past AA charges in detail.
- RAF pay scales 2026/27 - the pensionable pay that both scheme calculations rest on.
Disclaimer
PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated pension or financial advice. The pay figures in the two worked examples are illustrative inputs chosen to show the arithmetic; the accrual rates, revaluation rates, tax thresholds and allowances are the published ones cited above. The McCloud remedy is technical, member-specific, and interacts with HMRC tax legislation, scheme rules and individual circumstances - for substantial decisions especially at or near retirement, around Annual Allowance charges, or for immediate-choice members, consult a regulated FCA-authorised pension adviser with experience of public-service pension schemes.
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