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
Commutation Factors
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.’
Judicial Review
NARPO has been informed by the Office of the Pensions Ombudsman that the date for the court proceedings about whether GAD is within the Pension Ombudsman’s jurisdiction is set for Thursday 14 June 2012. Judgement will be given sometime later.
POLICE PENSIONS INDEXATION 2012
On Tuesday, 7th December 2011, Steve Webb MP, the Minister of State for Work and Pensions, made a statement in Parliament confirming that it was the Government’s intention to increase the second state pension and thus as a consequence public sector pensions including police pensions, where appropriate, by the September 2011 Consumer Price Index figure of 5.2%.I hope this helps to clarify the issue of the pension increase next April.
TO SEE THE FULL STATEMENT CLICK HERE
RPI/CPI: OUTCOME OF THE JUDICIAL REVIEW
Today the High Court handed down its judgement on our application for judicial review. I am sorry to have to tell you that the judges have found against us and have dismissed our application. However, on the second of the four main grounds argued, one of the three judges has dissented from the view of his two fellows.
In the initial view of our lawyers, the judgement is faulty in a number of important respects and, therefore, we are considering seeking permission to appeal this decision. We will decide whether or not to proceed to appeal in consultation with colleagues, once we have all had time to consider the judgement in more detail.
Clint Elliott, Chief Executive at NARPO said: ‘We brought this case on behalf of our members and we are extremely disappointed at this decision. Particularly at a time when the Government’s Office for Budget Responsibility says that on average the gap between the RPI and CPI is likely to increase to 1.4 percentage points a year effectively reducing the value of police pensions even further.’
SEPTEMBER CONSUMER PRICE INDEX ANNOUNCED AS 5.2%
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 GOVERNMENT HAVE DECIDED TO USE THE CPI TO DETERMINE PENSIONS INCREASES FROM 2010, THIS IS CURRENTLY SUBJECT OF LEGAL ACTION BY NARPO AND OTHERS.
For details of the increases applied see below:
How Index Linking Works
RPI INCREASES 1948 - 2010
HM TREASURY SITE MULTIPLIER TABLES RE PENSIONS INCREASES
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
NEW COMMUTATION FACTORS
The Government Actuaries Department [GAD] have just issued revised commutation factors for the Police Pension Scheme 1987.
These new factors apply to anyone retiring on or after the 20th April 2011.
The factors for all ages have been increased. However, please note that, as some of the revised commutation factors are now higher than 20:1, there may be tax implications for some retiring officers.
This is because the value of the commuted lump sum may now exceed the maximum permitted by HMRC, which is currently 25% of the total value of benefits vested. If the commuted lump sum does exceed the HMRC limit of 25%, the amount of the lump sum in excess of that limit will be deemed an unauthorised payment and subject to a 40% tax charge.
Those to whom this apply should be encouraged to seek independent financial advice based on their own individual circumstances.
GOVERNMENT ACTUARIES DEPARTMENT REPORT
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
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
Overseas Pension
There has been considerable discussion recently about the question of Guaranteed Minimum Pension and its relationship with the Police Pension. as part of the fall out from the 'overpayment' of pensions recently reported in NARPO News we have been in discussion with colleagues in the Public Service Pensioners' Council. We have been made aware that some public sector pensioners, who retired to countries where the UK state pension is not index linked, have not been receiving the Guaranteed Minimum Pension increases to which they are entitled.
We must make it clear that this situation is only applicable to those in excess of state pension age living in those mostly former Commonwealth countries where the UK state pension is frozen and who have service between April 1978 and April 1997.
If you think this may apply to you use the model letter below:
Formatted Letter
Double Taxation Treaties
PENSION CONTRIBUTION SCHEDULE
HOME OFFICE CIRCULARS BY YEAR
FIND DETAILS OF YOUR PENSION ADMINISTRATOR HERE
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