Scottish Government

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Justice Department Police Division Identity No: Police Circular No:12 /2003 Title: Police Pensions Reform Addressed to: Chief Constables Chief executives, Dumfries & Galloway council and Fife Council Clerks to the Joint Police Boards

St. Andrew's House Regent Road Edinburgh EH1 3DG Telephone: 0131 244 2155 Fax: 0131244 2666 George.Vine@Scotland.gsi.gov.uk http://www.scotland.gov.uk Our ref: DCC 7/4

Dates Issued: 15 December 2003 Topic:Terms and Conditions

Implementation:

Impact: Revision of the Police Pension Scheme

Contact(s) for more information: George Vine (Tel: 0131 244 2155)
Martin McDermott (Tel: 0131 244 2160) (at the above address)

Dear Colleague

Purpose of the circular: To draw attention to the consultation document which is being issued by the Home Office, Scottish Executive and the Northern Ireland Office on the modernisation of police pensions and to ask that arrangements are made for officers to have access to the information set out in Annex A about the new Police Pension Scheme and the effect of wider government pensions policy on pension ages. The consultation document is also available on the Home Office web site at www.homeoffice.gov.uk.

Summary of contents:

A consultation document is being issued to police interest groups, including the staff associations, inviting them to comment on proposals relating to the Police Pension Scheme. It is proposed to introduce a new Police Pension Scheme for new entrants by April 2006. The consultation document also explains wider government proposals for changes to UK-wide public service pensions and their relevance to both the existing and the new Police Pension Schemes.

A copy of this circular is enclosed for the Director of Finance in the police authority. Copies have also been sent to the Convention of Scottish Local Authorities, the police associations and the Accounts Commission.

George Vine
Police Division 1

Annex A

Police Pensions Reform

Launch of Home Office Consultation Document on Reforming Police Pensions - What does this mean for you?

Today the Home Office, the Scottish Executive and the Northern Ireland Office are issuing a consultation document on the modernisation of police pensions and are inviting comments from police interest groups including the staff associations. It is proposed to introduce a new Police Pension Scheme for new entrants by April 2006. The consultation document also explains wider government proposals for changes to UK-wide public service pensions and their relevance to both the existing and the new Police Pension Schemes.

This information is being sent to serving officers to explain that:

1. The new Police Pension Scheme will not affect your membership of the current Police Pension Scheme and your present entitlements to pension benefits after a police career.

2. Wider Government pensions changes to pension ages will affect only the deferred pension age of younger current scheme members who leave the force early.

1. NEW POLICE PENSION SCHEME

You can remain a member of the current Police Pension Scheme

All currently serving officers who remain in service as members of the current Police Pension Scheme will be able to remain in this scheme and the introduction of the new scheme will not affect your entitlement to current scheme benefits.

· an officer will still be able to retire with an immediate pension after 30 years' service irrespective of age;

· an officer who serves for less than 30 but at least 25 years will still be able to retire with an ordinary pension which is payable from the age of 50;

· an officer who joined the service at too late an age for retirement with an ordinary pension before compulsory retirement age will still be entitled to retire with a short service pension on the same basis as now, from age 55 depending on the officer's rank

· any ill-health and injury benefits payable to an officer in the event of his or her becoming permanently disabled for police duty will remain unchanged;

· any death-in-service benefits will remain unchanged; and any survivor benefits payable following the death in retirement of a former officer receiving an ordinary, short-service, or ill-health pension will remain unchanged.

You will have the option to transfer to the new Police Pension Scheme if you wish

For officers who may wish to transfer to the new scheme, the key features of the proposed new scheme are:

· a full pension of half final salary plus a lump sum of four times the pension;

· a full pension after 35 years' service;

· even build-up of benefits over a career - no accelerated accrual after 20 years;

· a minimum pension age of 55 and a deferred pension age of 65;

· life-long survivor benefits (i.e. no cessation on remarriage or co-habitation with a new partner);

· survivor benefits for unmarried (including same-sex) partners; and

· two tiers of ill-health benefits - depending on the severity of disablement for work.

The Consultation Document proposes that the lump sum above should be paid as a fixed sum in addition to the pension, but it also invites comments on the alternative of providing a two-thirds final salary pension with an optional lump sum. Under the proposed alternative option taking the maximum possible lump sum would also result in a half-salary pension plus a lump sum of four times that pension.

The next steps

The next step in the consultation exercise is to invite comments from police interest groups including the staff associations.

2. WIDER GOVERNMENT PENSIONS POLICY - PROPOSED CHANGES TO PENSION AGES

Change in the normal public sector pension age from 60 to 65

You may be affected if you leave the force before 25 years' service

Officers in the current Police Pensions Scheme who leave the service early on any grounds other than medical retirement may be affected by proposed UK-wide changes to public service pension ages.

The Government plans to raise the normal pension age for the public services from 60 to 65 from October 2006. It is Government policy that the new pension age of 65 should apply not just to new entrants after that date, but also to some existing staff in the public services, particularly those still relatively early on in their career. In the interests of consistency such a policy must apply across the public sector as a whole and include members of the current Police Pension Scheme, as well as members of the current Fire and Armed Forces' schemes, who leave the service early.

It is important to note that a change in the normal pension age from 60 to 65 would not affect the value of entitlements to a deferred pension at 60 already built up by officers, and would not necessarily prevent those leaving the service after the date of change to age 65 from getting a pension at age 60 if they wished. An option would be to offer such officers a deferred pension at that age at a reduced rate in respect of the pensionable service falling after the date of change.

No date has been chosen for this change as yet for the purpose of the current Police Pension Scheme. Any date for such a change affecting existing officers will need to be the subject of consultation with the Police Negotiating Board, taking account of how other public service pension schemes propose to apply the new pension age to the pensionable service of existing staff. The issue of raising the deferred pension age under the current Police Pension Scheme will be kept under review.

It is not proposed to apply such a change to the police service before there has been a full debate as to how this should be implemented across the public sector.

New Minimum Pension Age of 55 to be introduced by Inland Revenue in 2005This will not affect you as a member of the current Police Pension Scheme

Officers who are already in service and members of the police pension scheme when Government raises the minimum retirement age for members of the uniformed services to 55 in April 2005, will not be affected by the change. They will be able to go on to complete 25 years' service and will continue to be eligible to retire with an ordinary pension before age 55.

New entrants in and after April 2005

If the date for change in the minimum pension age of new entrants to the public sector is made in April 2005 but the introduction of the new Police Pension Scheme is not completed until April 2006, it will be necessary to consider the position of new entrants to the police service between those two dates. One option would be to offer new entrants from April 2005 membership of the new scheme as a paper exercise. This option would assume that by then the details of the new scheme would have been agreed. Another option would be to allow them to enter the existing scheme on exactly the same basis as pre-April entrants but with 55 as the earliest age at which they can draw an ordinary pension, while leaving all their other benefits including the deferred pension age of 60, if they leave with less than 25 years' service, as they are.

This is another issue which will be put to the Police Negotiating Board before a final decision is taken.

YOUR FURTHER QUESTIONS ANSWERED

It is hoped that the following Question and Answer briefing may deal with your immediate queries, but if you need any further information about your current pension entitlements or about the proposed new scheme please contact the police pensions administrator for your Force.

Questions about continued rights to the current scheme

Q. Would my membership of the current Police Pension Scheme be affected by an inter-Force transfer after the new scheme was introduced?

A. No, your membership of the current Police Pension Scheme would not be affected on transferring without a break in service either to another Force in England andWales or to a Scottish Force. You would also retain membership on transferring back without a break in service. The question of transfers to and from the Police Service of Northern Ireland will need to be considered further in consultation with the PNB.

Q. Would I be able to retain my membership of the current scheme if I took a career break?

A. Yes, if it were a career break approved by the Force under which you retained your membership of the Force and eligibility to a lump-sum grant for death in service.

Q. Would I be able to re-join the current Police Pension Scheme if I left the police service and returned to it after the new scheme has been introduced?

A. The PNB will need to consulted on the details, but we expect that if you left the service you would not normally be able to resume active membership of the current Police Pension Scheme on re-joining later on.

A possible exception would be if you were compulsorily retired on ill-health grounds but were later reassessed as no longer disabled. There would be a good case for allowing you to re-join the current scheme if returned to duty in such circumstances.

Questions about the new scheme

Q. Where can I find the full text of the Consultation Document?

A. You will find it on the Home Office website - www.homeoffice.gov.uk ///

Q. When would I be able to opt to transfer to the new scheme if I wanted to?

A. This will be the subject of consultation with the PNB but it may have to be after the introduction of the new scheme. This would enable the necessary information to be provided to officers about the choice they were to make. It is important that an officer should not make the change without fully understanding the implications.

Q. If I opted to transfer to the new scheme could I transfer back again?

A. No, that is not included in the proposals. That is why we need to make sure that you can make an informed choice about opting to transfer to the new scheme in the first place.