Thousands of retirees could be missing out on up to £10,000 in extra money due to errors in the Teachers' Pensions scheme, according to MoneySavingExpert. The site, founded by Martin Lewis, has warned that those in the scheme run by Capita have been experiencing delays in receiving payments.
Delays in Payments and Claims
Many pensioners have also faced delays when claiming on behalf of someone who has died. The issues stem from changes made to public sector pensions between 2014 and 2015, when the Conservative government moved most employees, including teachers, to new career average pension schemes. Previously, workers were on final salary pensions based on pay near retirement. The new scheme calculates benefits based on average earnings over the entire career.
Impact on Different Age Groups
Those within 10 years of retirement remained on the old, more generous scheme, while younger employees were moved to the new scheme in 2015. However, the move was challenged in court, and in 2018 the High Court ruled in favour of the workers. As a result, the government moved all workers to the career average scheme by March 2022.
The McCloud Remedy
Despite the move, different rules applied to different workers between 2015 and 2022. To address this, the government created the "McCloud remedy," allowing affected individuals to choose whether their pension benefits for those seven years are calculated under the final salary or career average rules. The process begins with the pension provider issuing a personal "remediable service statement" (RSS) to those affected, comparing the benefits under both schemes.
Depending on the choice, this could mean thousands or even tens of thousands of pounds in backdated payments. In some cases, members may need to repay money if they opt for a lower pension benefit than the one they currently receive.
Delays in Issuing Statements
The government's original deadline to issue all RSS notices was early 2025, but this was later pushed back. A Department for Education spokesperson said: "We understand and recognise the disruption that delays have caused for some teachers – the Transitional Protection (McCloud) remedy is one of the most significant changes to public service pensions in recent years, and delivery is being phased to ensure accuracy and fairness for members due to a complex process."
A Capita spokesperson added: "Capita administers the Teachers’ Pension Scheme on behalf of the Department for Education and in line with scheme regulations. The scheme has experienced a sustained increase in complexity and volumes in recent years, including as a result of regulatory changes, which has contributed to delays in some cases."
