Police Pensions

Police Pensions

LATEST UPDATE FROM MOUCHEL

Use the below link to view an update provide by Mouchel who administer a number of Police Pensions for Forces around the country.

LATEST NEWS

Please note Mouchel do not administer all Forces Police Pensions. 

GAD ISSUE COMMUTATION FACTORS FOR 2001 and 2004

Following the determination of the Pensions Ombudsman in Milne v the Government Actuary’s Department (GAD), this document, provided by GAD, includes tables of factors to be used in calculating redress and detailed guidance for scheme administrators to aid them in calculating the amounts owed to individuals. Use the link below to view the document:

NEW FACTORS GAD DOCUMENT

The document confirms than men who retired on or after 1/12/2001 will receive additional amounts, Unfortunately it confirms that only women who retired on or after 1/12/2004 will receive additional amounts - this is becaause the factors in the new 2001 tables are less than the factors that applied to women post 1998.

 

HOME OFFICE RESPOND TO NARPO LETTER

NARPO have now received a response from the Home Office in relation to the commutation factor dispute in which they confirm that Force Pension Administrators are now working to identify those affected, calculate the sums owed and ensuring that payments are made as soon as possible.

HOME OFFICE RESPONSE

 

GOVERNMENT ACTUARY'S DEPARTMENT LATEST TECHNICAL BULLETIN

GAD have issued a further update in relation to the commutation factors and the process of payments. Click on link below to view: 

LATEST GAD UPDATE

GOVERNMENT ACCEPT OMBUDSMAN DECISION

NARPO are pleased to note that we have now received a response from the Treasury in which they confirm that the Government accept the determination in full - not only in relation to Mr Milne but also in relation to the other individuals potentially affected by the determination. 

They also confirm that Police and Firefighter Pension Scheme  Administrators are now working to identify affected individuals and will ensure that payments are made as soon as possible.

We would encourage Members to be patient in this matter and not overburden Administrators with queries at this stage allowing them to get on with the task in hand as quickly as possible without distraction.

A copy of the letter can be seen by clicking the below link.

 

TREASURY LETTER

 

 

Commutation Factors – Pension Ombudsman’s Determination 

Following the publication of the Pension Ombudsman’s Determination into his investigation of a complaint of maladministration by the Government Actuary’s Department failure to regularly review police and firefighters pension commutation factors we have received a high volume of enquiry about the outcome and implications for individual members of that determination.

 

The below link gives a brief history of the complaint and addresses, in particular, the question of further complaint about historic commutation factors. The views expressed in the document, in particular about further complaint, are based on comments made by the Ombudsman in his determination. 

 

 Commutation pre 2001

  

COMMUTATION FACTOR DISPUTE - LATEST NEWS 

A short Commutation factor Q and A received from the Police Pensions Team at the Home Office can be viewed by using the link: Q and A

Final decision published: 15 May 2015 

We have published the final decision on the complaint made by Mr Milne against the Government Actuary’s Department (GAD) about the factor used to convert his pension into a lump sum at retirement and whether the factors should have been reviewed earlier than they were. 

Tony King, the Pensions Ombudsman, has decided in Mr Milne’s favour.  The Pensions Ombudsman decided that the factors should have been reviewed between 1998 and 2005, when Mr Milne retired.  He has directed GAD to assess what the factor would have been in 2005 if reviews had taken place and to notify the administrator of the relevant part of the Firefighters’ Pension Scheme so that they can recalculate the cash sum.  He also directed GAD to pay interest on any additional cash sum, from Mr Milne’s retirement date.

See more at: PENSION OMBUDSMAN 

The Government Actuaries Department [GAD] have prepared a technical note that includes the following:

The Ombudsman notes that, whilst his findings in the Determination are limited to Mr Milne’s complaint, the principles are the same for other retired firefighters and police officers. To avoid further cases having to be heard, he expects government to make arrangements for payments to be made to others affected, reflecting the more beneficial terms that would have applied had commutation factors been reviewed and, where appropriate, revised at the appropriate times. GAD has prepared tables for use in the calculation of redress, based on a best reconstruction of the commutation factors which would have applied if factors had been reviewed and revised at 1 December 2001 and at 1 December 2004. The mortality and related assumptions used in the development of these tables have been reviewed by an independent firm of consulting actuaries who have confirmed that the assumptions fall within the range that GAD might reasonably have chosen if it had prepared revised commutation factors at these dates. These tables will be passed to the relevant government bodies.

 So it would appear that new factors should be applied to all those who retired after 1st December 2001 and those factors should be recalculated for those who retired after 1st December 2004. 

Full GAD technical note available HERE 

From the tone of the Ombudsmans determination and GAD's technical note it is obvious that they envisage and encourage this matter to be resolved as soon as possible and those eligible should be reimbursed the monies owed at the earliest opportunity. Extract from Ombudsman determination below: 

There are also members of the Police Pension Scheme with the same interest. They will have retired at different points in time, so the result in Mr Milne’s case may not exactly apply to them. (The factors are also age and gender dependent, of course.) However, the principles are the same.

In theory every one of those retired members could complain to the Pensions Ombudsman Service – though there would be severe practical difficulties if they did, as mentioned above. However, bearing in mind GAD’s recent detailed work on what the factors should have been in 2001, I have every hope and expectation that GAD, the Department and all other interested bodies, including those representing fire and police authorities, will swiftly jointly consider what steps should be taken to ensure that further determinations are not necessary. That may involve discussion as to where liability lies, particularly as following the division of liability above is likely to be administratively burdensome. However, the particular public sector pocket or pockets used to make payments from is of no significance to the members. So I strongly recommend that the question of where liability ends up should be regarded as secondary to the members receiving as soon as possible such payments as they will be due. 

HM Treasury spokeswoman said the ruling would also have implications for police pensions. “The government accepts the Pensions Ombudsman’s determination in full and will ensure that the directions made in relation to Mr Milne are taken forward in due course,” she said. 

 “The government recognises that there may be other individuals who are potentially affected by the principles set out in this determination. Firefighters’ and police pension schemes across the UK will work to identify such affected individuals and ensure that appropriate payments are made.” 

See more at: THEACTUARY

AT THE MOMENT WE ARE HOPEFUL THAT THESE PAYMENTS WILL BE MADE TO THOSE ELIGIBLE AUTOMATICALLY WITHOUT THE NEED FOR INDIVIDUALS TO CONTACT THEIR PENSION ADMINISTRATOR.

IF THAT SITUATION CHANGES AND INDIVIDUALS NEED TO ACT WE WILL UPDATE THE WEBSITE AT THE EARLIEST OPPORTUNITY.

 

  POLICE PENSION OVERPAYMENTS

It has come to our notice that throughout England and Wales as Forces outsource their Pension Administrators to external or other providers, a large number of anomalies are arising; which have resulted in them identifying that a number of Pensions have been paid incorrectly, for a variety of reasons.

This has led to the Pensioner having been underpaid or overpaid for a number of years. In the event that you have been underpaid, the monies owed should be paid to you as soon as possible; if the Administrator is indicating that you have been overpaid it is important that you DO NOT agree to repay any monies; at least until you have established the exact reason for the overpayment.

Most of these overpayments will have been made as a result of 'mistakes' or 'errors' made by the Pension Administrator and in view of that you should follow the course of action as outlined in the below documents. 

COURSE OF ACTION 

RECOVERY OF OVERPAYMENTS 

PENSIONS ADVISORY SERVICE ADVICE 

SEPTEMBER CPI RELEASED 

The Office of National Statistics has today released the Consumer Price Index for September 2014 as 1.2% down from 1.5% in August.

For those eligible for Pension Increase Police Pensions will rise by 1.2% in April 2015.

 

See ONS website for details at: ONS 

 

GUARANTEED MINIMUM PENSION

At State Pension age, although the Police Scheme remains responsible for updating the bulk of your police pension, in line with the relevant index, the State becomes liable to index link the much smaller Guaranteed Minimum Pension element of your police pension. For a full explanation use the link below:

INDEX LINKING OF STATE AND POLICE PENSION

PARLIAMENTARY NOTE RE GMP's

PARLIAMENTARY BRIEFING ON GMP's

HOME OFFICE CIRCULAR 31/2008 RE GMP OVERPAYMENT

NATIONAL AUDIT OFFICE REPORT ON GMP OVERPAYMENT

This is not the case however for those permanently resident abroad in a country where the state pension is frozen, which includes; Australia, Canada, New Zealand and South Africa.

In these cases the Police Pension Scheme, by a Treasury Direction (currently dated 6 July 2000) does not reduce their inflation-proofing and the full increase is applied.

See Home Office Library document below from page 21 onwards.

OVERSEAS PENSION AND GMP

 

REDUCTION OF POLICE PENSION UPON RECEIPT OF STATE PENSION

We are often asked why the Police Pension reduces when a member starts receiving their State Pension.

Please use the link below to view the explanation.

MODIFICATION OF POLICE PENSION

HOW PENSION INCREASES WORK

POLICE PENSION INCREASES AND STATE PENSION

TAXATION ON STATE PENSION

WHAT IS CONTRACTING OUT?

INCREASING YOUR NI CONTRIBUTIONS

HOW DO YOU GET NI CREDITS

HMRC GUIDE TO CONTRACTING OUT

CONTRACTED OUT HELPLINE

 

PUBLIC SECTOR PENSIONS OVERPAYMENT 

Recent questions in the House of Commons and attendant publicity has highlighted an issue of overpayment of pensions to retired public sector employees including those in the police scheme.

This is a complicated issue.

In essence, the problem has to do with the Guaranteed Minimum Pension, its calculation, index linking and impact on the individual's Police Pension index linking.

Guaranteed Minimum Pensions were provided by public service pension schemes between 1978 and 1997. The problem will not affect any pensioner unless he or she is over State Pension age with service in this period and for whom the force have no record of a GMP.

It is estimated that between 1220 and 1830 (1% - 1.5%) police pensioners in England and Wales may be affected by this miscalculation. No overpayments are to be recovered but an adjustment will be made to the pensions of those affected in April 2009.

For those who require more details of the problem and its likely impact we have added a link to the relevant Home Office advice to forces: Home Office Circular 31/2008 

To view the National Audit Office Report on errors in the Guaranteed Minimum Pension please use this link NAO report

 Commutation Factors Background

The announcement of new commutation factors for the police pension scheme made at the Police Federation Conference in May 2008 resulted in a legal challenge to the original commencement date of those factors. The Judicial Review taken by the Police Federation was successful in achieving a new commencement date for those factors of December 2006. Throughout the legal process we kept members informed of progress with the challenge.

Members will be aware that the Fire Service Pension scheme is similar to the Police scheme. From the initial announcement of the ‘new’ factors in 2008, the Fire Brigades Union have taken a different approach to this issue and have encouraged their former members to complain of maladministration of their scheme as no increases to commutation factors took effect from 1998 until the recent increase. We are aware that a number of former police officers are in the process of making similar complaints. We have been in touch with the Pension Ombudsman’s office about this matter and the below statement is published on their behalf in an attempt to assist them. We will continue to be in contact with the Ombudsman over this matter and will consider publishing further advice once the Judicial Review process referred to in the statement is finalised. 

‘A number of fire-fighters have complained to the Pensions Ombudsman that the tables of commutation factors of the Firefighters’ Pension Scheme should have been revised by the Government Actuary’s Department (GAD) earlier than they were in 2006, which would have resulted in larger lump sum benefits when they commuted part of their pensions on retirement. Whether GAD is within the Pensions Ombudsman’s jurisdiction is now the subject of court proceedings. Until those proceedings have concluded, which could be as late as autumn 2012, the Pensions Ombudsman cannot investigate the Firefighters’ complaints.  The same applies in respect of similar complaints about the Police Pension Scheme. So the Pensions Ombudsman has said that it is reasonable for members not to submit such complaints to him between now (December 2011) and when those proceedings have concluded. If former police officers submit such a complaint to thePensions Ombudsman after proceedings have concluded, the timefrom December 2011 to when those proceedings are concluded, will not count when the Pensions Ombudsman looks at whether the complaint has been made in time.’

 

POLICE PENSION AND INDEX LINKING

Police Pensions are currently Index Linked from age 55yrs and are increased in line with the Retail Price Index.
Pensions are uprated each April and the level of increase is determined by RPI in September of the preceding year.

The index used to uprate Pensions changed to the CPI in 2010 implemented April 2011.

For details of the increases applied see below:
HOW INDEX LINKING WORKS

2015 MULTIPLIER TABLES
 RPI INCREASES 1948 - 2010
 

TAXATION OF PENSION ENTITLEMENT FOLLOWING RE-EMPLOYMENT

The question of taxation of pension benefits in some circumstances following re-employment is proving a difficult subject to resolve.

NARPO have been working hard to provide answers and an acceptable solution to this problem since we became aware of it late last year. Whilst we agree that tax is a personal matter we have been the only representative organisation which has endeavoured to provide information and advice on this worrying topic. We will continue to seek a solution and provide that advice.

We also understand that ACPO and the Police Federation, whilst not in a position to provide individual advice, have also made representations along the same lines as NARPO to the Home Office seeking a fair solution to this problem.

One difficulty with this issue and the current position is, as we understand it, that several forces are independently making representations to HMRC to seek a solution. HMRC can from our own experience be cautious in their approach to matters such as this and this can prolong the process of negotiations. ACPO as a body is not involved in those negotiations, which are being conducted on a force by force basis, but, as well as making representations to the Home Office on this matter, ACPO has made similar representations to HMRC. It is our understanding that whatever results from the individual force dealings with HMRC, the Revenue will be seeking a single solution for all forces. This may take some time possibly up to two months to get a definitive answer from HMRC.

Whilst it may be difficult advice to accept, those affected might consider waiting for the outcome of those discussions before taking any further action.

If however you have been told by your force that you have a tax liability, one course of action would be to write to the force, expressing surprise at the position you find yourself in and seeking a written response from the force as to the actual tax payable and the specific reason for that tax demand. Once the force has responded, we still believe it appropriate to make a complaint of maladministration of the pension scheme, initially through the force pension Internal Dispute Resolution Procedure and eventually to the Pension Ombudsman.

This is a very complex area substantially influenced by individual circumstances. NARPO are not tax experts and those affected should actively consider obtaining independent tax advice.

We have now received further advice on these issues please use the links below:

USEFUL Q and A's

TECHNICAL ANALYSIS

Whilst we are unable to provide any tax advice to individuals, the below links to the technical pages of the HMRC website do contain further useful explanations of the current situation:

Protected Pension Age under 50

Protected Pension Age under 50

Employment after taking benefits

Loss of Protection after Employment Age 50 - 54

Restriction on Employment Age 50 - 54

Any members who feel they may be affected by this, should consider taking their own tax advice.

One of NARPO's member service providers is TWD Accountants who specialise in tax matters and their contact details can be found on the Member Services page of the website.

MEMBER SERVICES PAGE

PENSION SHARING ON DIVORCE

Please find several useful documents in relation to Pension Sharing below. This is a complex area and it is advisable to seek expert advice from one of our police divorce solicitors whose details are available on the Member Services page of our website.

Pension Sharing

Pensions and Divorce

Pension Sharing and Divorce

Pension Sharing Transfer Values

 

COURT OF APPEAL DECISION RPI/CPI CHALLENGE

The Court of Appeal has now handed down its decision in relation to the Governments switch to the CPI as the index used to uprate pensions.

As you will see the appeal was dismissed.

COURT OF APPEAL DECISION 

HOW HAS THE CHANGE AFFECTED MY PENSION?

 

 

PENSION CONTRIBUTION SCHEDULE

HOME OFFICE PUBLICATIONS
PNB CIRCULARS BY YEAR
FIND DETAILS OF YOUR PENSION ADMINISTRATOR HERE

 

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