Correspondence

Circular 014/2013: further information on long-term police pension reform

Sets out the government's position on some of the details of the new police pension scheme, including information on how transitional arrangements will apply.

Document

Details

  • broad subject: Police service
  • sub category: Police pensions
  • issue date: 19 November 2013
  • implementation date: 19 November 2013
  • from: Crime and Policing Group, Policing Directorate, Police Workforce and Efficiency Unit
  • for more information contact: Police Pensions Team 020 7035 6959, or email police pension team

Addressed to:

  • Chief officers of police (England and Wales)
  • Chief Officer of Police (Northern Ireland)
  • Chief officers of police (Scotland)

Further information on long-term police pension reform

The reform design framework for a new police pension scheme to come into effect on 1 April 2015 was published on 4 September 2012. The RDF set out the government’s final position on the main elements of the scheme design, including principles on protection of accrued rights and protection for those closest to retirement.

As set out in the RDF, the core parameters for the new scheme are:

  • a pension scheme design based on career average revalued earnings (‘CARE’)
  • a normal pension age of 60
  • a provisional accrual rate of 1/55.3 of pensionable earnings each year, subject to agreement on the outstanding issues
  • a revaluation rate of active members’ benefits in line with the Consumer Prices Index (CPI) + 1.25%
  • pensions in payment and deferred benefits to increase in line with CPI
  • average member contributions of 13.7%
  • retirement from the scheme’s minimum pension age of 55, built around the scheme’s Normal Pension Age of 60
  • a deferred pension age equal to the individual’s state pension age
  • an optional lump sum by commutation at a rate of £12 for every £1 per annum of pension foregone in accordance with HMRC limits and regulations

The RDF set out full statutory protection for accrued rights for members who transfer to the CARE scheme as follows:

  • all benefits accrued under final salary arrangements will be linked to the member’s final salary, in accordance with the rules of the member’s current schemes, when they leave the reformed scheme
  • full recognition of a member’s expectation to double accrual for service accrued under the Police Pension Scheme 1987 (‘the 1987 scheme’), so that a member’s full continuous pensionable service upon retirement will be used to calculate an averaged accrual rate to be applied to service accrued under the 1987 scheme
  • members of the 1987 scheme to be able to access their 1987 scheme benefits when they retire at or after that scheme’s ordinary pension age (that is, from 30 years’ pensionable service; age 50 with 25 or more years’ pensionable service; or the member’s voluntary retirement age), subject, where appropriate, to abatement rules for that scheme. Pensionable service for the purpose of calculating the ordinary pension age will include any continuous pensionable service accrued under both the 1987 scheme and the 2015 scheme
  • members of the Police Pension Scheme 2006 (‘the 2006 scheme’) to be able to access their benefits under that scheme when they retire at or after that scheme’s Normal Pension Age (age 55)
  • members will continue to have access to an actuarially assessed commutation factor for benefits accrued under the 1987 scheme

The RDF set out the statutory transitional and tapered protection for certain categories of members as follows:

  • transitional protection for all active 2006 scheme members who, as of 1 April 2012, have 10 years or less to their current normal pension age (age 55). They will see no change in when they can retire, nor any decrease in the amount of pension they receive at their current Normal Pension Age. This protection will be achieved by the member remaining in their current scheme until they retire
  • transitional protection for all active 1987 scheme members who, as of 1 April 2012, have 10 years or less to age 55 or have 10 years or less to age 48 and are 10 years or less from a maximum unreduced pension. They will see no change in when they can retire, nor any decrease in the amount of pension they receive at their current normal pension age. This protection will be achieved by those members remaining in their current scheme until they retire
  • there will be a further period of tapered protection for up to 4 years for scheme members. Members who are within 4 years of qualifying for transitional protection, as of 1 April 2012, will have limited protection so that on average for every month closer to qualifying for transitional protection they gain about 53 days of protection. The period of protected service for any member under these tapering arrangements will have finished by 31 March 2022. At the end of the protected period, they will be transferred into the new pension scheme arrangements. Further details on how the tapered protection will apply are set out in the RDF.

The RDF made clear that there was further detail to be resolved in finalising the scheme. This circular sets out the government’s position on some of that detail, including further information about how transitional arrangements will apply. This is intended for member information: the final scheme rules will be set out in forthcoming regulations.

Consultation with the Police Negotiating Board on the detail of the scheme is continuing, and we will provide further information on those issues that remain outstanding in due course.

Please download the PDF attachment for the complete circular, which provides further information on:

  1. career average revalued earnings (CARE) schemes and revaluation
  2. calculation of accrued benefits
  3. part-time service and transistional and tapered protection
  4. part-time service and accrued rights in the 1987 scheme
  5. career breaks and uppaid leave
  6. commutation
  7. transistional and tapered protection
  8. opting out
  9. actuarial reduction
  10. protected pension age
  11. pension transfers
  12. added 60ths, added years, AVCs and additional pension
  13. death in service - lump sum death grant
  14. next steps
  15. equality considerations
  16. glossary
Published 19 November 2013