Police Pensions

Police Pensions

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 

 

COMMUTATION FACTORS LATEST

GAD HAVE BEEN REFUSED PERMISSION TO APPEAL TO THE SUPREME COURT

AND THE OMBUDSMAN IS NOW DEALING WITH THE COMPLAINT.

CLICK BELOW FOR UPDATE

OMBUDSMAN UPDATE

 

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

 

2014 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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