Chapter 1 pension scheme guidance
If you’re a member or a beneficiary of a member of a public pension scheme and not a judicial or local government scheme member, check how the public service pensions remedy (known as McCloud) could affect you.
What a Chapter 1 scheme is
A Chapter 1 pension scheme is a public service pension scheme which is:
- not a pension scheme for holders of a judicial office
- not a pension scheme for local government workers
This includes pension schemes for:
- the NHS
- the armed forces
- teachers
- the police
- firefighters
- civil servants
Chapter 1 schemes are split into:
- new schemes — schemes which started from 1 April 2015 (following the public service pensions reform)
- legacy schemes — schemes which started before 1 April 2015
Who the remedy applies to
The remedy only applies if you have remediable service.
Remediable service is (all of the following):
- where you had pensionable service on or before 31 March 2012
- where you had pensionable service under a Chapter 1 scheme or excess teacher service at any time between 1 April 2015 and up to 31 March 2022 for a non-agency scheme, or 1 April 2016 and up to 31 March 2022 for an agency scheme (this is known as the remedy period)
- where you did not have a gap in pensionable service which lasted more than 5 years, and which started or ended between 1 April 2012 and 31 March 2015 (31 March 2016 for an agency scheme)
Excess teacher service refers to the part-time employment, where a teacher has a full-time employment and a part-time employment at the same time, and the part-time employment is pensionable in the Local Government Pension Scheme.
How the remedy affects you
How you are affected depends on your status, or the status of the member who you are the beneficiary for, within the scheme as of 30 September 2023, these are:
- active member — you were still building up pension benefits in your public service pension scheme and you had not yet started taking any of your pension benefits
- deferred members — you were no longer building up pension benefits in your public service pension scheme and had not yet started taking any pension benefits
- pensioner member — you had started taking your pension benefits
- deceased member
Rollback
Under the remedy, pensionable service under the Chapter 1 new scheme will be rolled back to the Chapter 1 legacy scheme.
This means that any pensionable service, up to and including 31 March 2022, will be treated as having always been in the Chapter 1 legacy scheme and as never having been in the Chapter 1 new scheme.
Any pensionable service from 1 April 2022will be built up within the Chapter 1 new scheme.
This will have an impact on the pension input amount which will be shown on the pension savings statement.
How transfers into the scheme are affected
How transfers made into the new scheme during the remedy period are treated depends upon the rules of the pension scheme. Your pension scheme administrator can tell you how they will be treated.
How voluntary contributions into the new scheme are affected
In most cases, any voluntary contributions made into the new scheme during the remedy period will not be rolled back automatically.
The schemes regulations will set out if you are given a choice as to how your voluntary contributions are treated. Your scheme administrator will let you know what options you have.
Active and deferred members
If you were an active member or a deferred member on 30 September 2023, you will need to choose whether you want to take legacy or new scheme benefits for the remedy period when you retire.
If you do not make a decision, the scheme administrator will make a decision whether you should receive new scheme benefits.
Pensioners and deceased members
If you are a pensioner or a beneficiary of a deceased member, you will be given a remediable service statement and then asked to choose if you want to receive the Chapter 1 new scheme or legacy benefits for the remedy period.
If you choose the new scheme benefits, the benefit takes place retrospectively. This means the amount of the benefit changes, dating back from immediately before you became entitled to your pension. If the person died before becoming entitled to their pension, it will date back to immediately before their death.
You must make a decision within one year of receiving the remediable service statement. If you do not make a decision, the scheme administrator will make a decision whether you should receive new scheme benefits.
Check if the remedy affects your tax
As a result of the remedy, the pension contributions you should have paid during the remedy period may be different but. This will not affect any tax relief you received. Your pension scheme provider will tell you if you have overpaid or underpaid pension contributions and what actions you need to take.
If you had or were close to having an annual allowance tax charge
Your tax position may have changed if your pension input amount has changed as a result of the remedy. If you had or were close to having an annual allowance tax charge during the remedy period, you may need to review and calculate your annual allowance position.
Check if your annual allowance has been affected. If it has, you will need to calculate your tax position and make a submission to correct it.
Impact on lifetime allowance tax charges
If you had a benefit crystallisation event during the remedy period, this may be updated. You should check how your lifetime allowance is affected, as you may be due a refund of a previous charge, or you may be liable for a new or increased charge.
If there is an increased or new charge, your pension scheme administrator will contact you to let you know the amount.
What your scheme administrator will send you
Remediable service statement
Your pension scheme administrator will send you a remediable service statement by 1 April 2025, regardless of your status. This will give details of the benefits under both the legacy, and new scheme — allowing you to compare the benefits.
Active members will continue to receive a remediable service statement annually until you choose which benefit to take.
Deferred members will need to request any further remediable service statements from your pension scheme administrator.
Pension savings statement
If you received pension savings statements during the tax years covered by the remedy, your pension scheme administrator will issue you with revised statements if your pension input amount has changed.
If you did not receive pension savings statements during the tax years covered by the remedy, but your pension scheme administrator identifies increases in your pension input amount over the annual allowance for the tax year, they will issue you with a new statement.
You can also ask for statements from your pension scheme administrator.
You should use these statements to help you work out if you have a new, increased or decreased annual allowance tax charge.
Benefit crystallisation event statement
Your pension scheme administrator will issue a revised benefit crystallisation event statement if the amount of your benefit crystallisation event has changed.
If you are given a benefit crystallisation event statement and you have had a benefit crystallisation event in another pension scheme, you must send a copy to the other pension scheme.
If you opted out of your pension
If you opted out of your public service pension scheme during the remedy period, you can ask your pension scheme if you can opt back into the scheme.
For civil servants, who chose to have a partnership pension account, you can ask to be returned to the Civil Service legacy scheme.
Your scheme regulations will set out the conditions of how you can do this.
If you want an agent to act on your behalf
You will need to give written permission if you want an agent to submit your updated information to HMRC. They will then be able to use the Calculate your public service pensions adjustments service to check any changes in your tax position and submit the information on your behalf.