One of the top pension-related talking points amongst teachers currently is the McCloud Ruling. Everyone seems to be aware of it; not everyone seems to understand it.
In this short video, George Rashbrook covers the McCloud Judgement and what it means for those in the Teachers’ Pension Scheme.
In this video the topics George covers are:
- What is the McCloud Judgement?
- The changes to the Teachers’ Pension Scheme in 2015
- Who it affected and how the changes were implemented
- Why these changes to the Teachers’ Pension Scheme were made
- Legal challenges to the changes to the TPS
- The McCloud Ruling and how it impacts the Teachers’ Pension Scheme
- Free educational seminars for teachers and educators
- Seek independent financial advice from a teachers’ pension specialist
What is the McCloud Judgement & What Does it Mean for Teachers’ Pensions?
Watch the video now or alternatively, you can read it as an article below.
What is the McCloud Judgement?
The McCloud judgement (otherwise known as the McCloud Ruling) refers to the 2015 Court of Appeal’s decision that the Government’s public sector pension changes unlawfully treated existing public sectors differently.
The changes to public sector pensions were made based upon a scheme members’ age on 1st April 2012.
The McCloud Judgement followed two Employment Tribunals; one concerning the pensions of Judges’ (McCloud) and Firefighters’ (Sargeant) respectively.
The McCloud Ruling is seen as a landmark case, in uncovering discrimination in the provision of public sector pensions.
The changes to the Teachers’ Pension Scheme in 2015
The newest version of the Teachers’ Pension Scheme came into effect on 1st April 2015.
These changes involved:
- Some teachers being automatically switched to a new scheme
- Some staying in their current scheme
- Others being gradually moved from one scheme to another
Who it affected and how the changes to the TPS were implemented
Most teachers were automatically moved out of whichever scheme they were in and into the new one on that date.
However, any teacher who was within ten years of their normal retirement date when this was proposed in April 2012 was allowed to stay in the scheme they were already in.
Anyone who was between ten and thirteen-and-a-half years of their normal retirement date was still moved across but it was more gradual, phased between 2015 and 2022.
Everyone else was automatically transitioned across in 2015.
Similar arrangements were made across most if not all public sector pension schemes.
Why these changes to the Teachers’ Pension Scheme were made
These transitional arrangements were designed to ensure people who are within touching distance of retirement didn’t have to deal with a range of impactful changes to their pensions at the least minute.
Legal challenges to the changes – background to the McCloud Judgement
However, some people felt this was unfair. People who were moved to a new scheme without consultation, whilst others nearer retirement were given the option, felt this was discriminatory.
The McCloud Judgement doesn’t actually relate to the Teachers’ Pension Scheme directly.
It was a member of the Judges’ Pension Scheme who challenged the arrangements on the ground of age discrimination.
This challenge was upheld.
There was a second challenge, this time to the Firefighters’ Pension Scheme – the Sergeant Judgement.
This was also upheld.
The McCloud Judgement and how it impacts the Teachers’ Pension Scheme
As a result, these changes to public sector pensions across the board have been ruled as unlawful and therefore have to be put right.
This includes the Teachers’ Pension Scheme.
In short, this means people unfairly impacted will now get to choose whether they want their service for the seven years between April 2015 and March 2022 to be counted in whichever of the older schemes they were in previously or in the newer scheme they were automatically moved into.
This is where it starts to get complicated.
The older schemes aren’t better than the new one; they’re just different.
Therefore, some people will be better off in the new scheme and the McCloud Judgement will make no difference to them.
Some people will be better off in the new scheme and for some people the difference can be quite substantial.
Free educational pension & retirement seminars for teachers & educators
If you want to understand more, please get in touch with us or book onto one of our specialist Teachers’ Seminars.
We hold regular, educational pensions and retirement seminars for teachers offering free advice to those in the TPS.
Our Understanding the Teachers’ Pension Scheme seminar covers:
- Which version (or versions) of the scheme are applicable to you
- How your benefits are accumulated over time
- The options for increasing your pension benefits
- How pension lump sums (also known as tax-free cash) work
- Understanding early and phased retirement
- Options for deferred retirement (working beyond your normal retirement age)
- Ill health pensions
- Pension death benefits – in service, in deferment and in retirement
We are FCA regulated Independent Financial Advisers.
Our presenters are highly qualified and experienced pension specialists authorised to give bespoke financial advice to individuals and organisations.
Seek independent financial advice from a teachers’ pension specialist
Which is right for you will depend on your personal circumstances so there’s no way I can possibly address it here.
Whatever your circumstances I strongly recommend you take independent advice, put yourself in an informed position and plan ahead.
Looking for guidance on your decision?
Confused about the best path to take?
I’m on hand to help.
About George Rashbrook – specialist financial adviser for teachers
George has been a financial planner since 2005 and is a specialist in the Teachers’ Pension Scheme.
George is knowledgeable in all areas of pension planning including Workplace Pensions with a particular specialism in Public Sector pension advice.
Who are Sterling & Law – Hampshire?
Sterling & Law Hampshire offers expert independent financial advice & wealth management services to a range of people across Hampshire.
With offices in Fareham & Lee-on-the-Solent, we are well placed to cover Southampton, Portsmouth, Winchester, Gosport, Chichester, and The Meon Valley.
The services we offer include:
- Financial Advice
- Savings & Investments
- Financial Planning
- Retirement Planning
- Estate Planning & IHT Advice