Engaging with the Government around the police pension schemes is one of our most important areas of work because a police pension has always been regarded as a key element of the remuneration of our members.
The Government announced a public consultation on 16 July 2020 after the Court of Appeal ruled that the Government’s changes to pensions in relation to the introduction of transitional arrangements were discriminatory on the grounds of age. You can view our full response to this consultation here.
On Thursday 4 February 2021 the Government published its response to the cross-sector public pensions consultation regarding the Remedy to rectify the discrimination caused by the 2015 pensions reforms. You can read the Government's full response here. As was the case for the consultation, the response covers all public sector schemes, not just police schemes.
Latest update - June 2021 - Guidance for members about to retire
The Home Office has now issued an update to the existing informal and non-statutory guidance on immediate detriment cases.
The guidance applies to pipeline immediate detriment cases (i.e. those cases where the member is about to retire and receive their pension) and does not cover where a pension is already in payment. This is technical guidance and aimed primarily at pension managers and practitioners.
As you will know, to implement remedy in full, both primary and secondary legislation are required, as well as administration work (at local Force level) to implement the changes. The deferred choice underpin will be implemented by October 2023.
As a result, the guidance will not offer resolution to all the current issues – there are outstanding technical issues that are being worked through across the public sector pension schemes and the responsible Government departments. The updated guidance aims to provide ways forward where possible.
The guidance provides informal advice but the overall responsibility for interpreting and applying the pension scheme regulations still remains with each Chief Constable as the relevant scheme manager. Forces and administrators will need to consider the guidance in relation to their own process and systems.
April 2021 - seeking evidence that Remedy will not cause further discrimination
On 20 April 2021 we wrote to the Home Secretary to seek evidence and clarification that the implementation of the public sector pensions Remedy would not cause further discrimination to any of our members. You can read the letter here.
In our response to the Remedy consultation we raised serious concerns around the impact of the Remedy proposals on some groups of members. Our letter to the Home Secretary invites comment and justification on a number of potential issues that we have identified in our initial response to the Government’s proposed Remedy to the discrimination.
We have also written directly to the Home office on a number of other concerns including taxation implications of the Remedy, the position of late joiners to PPS 87, and non-club transfers affected during the Remedy period. Additionally, we continue to discuss the logistics of the implementation of the Remedy with the Police Scheme Advisory Board.
We have now had the opportunity to go through the Government’s consultation response in detail and have met with the Police Scheme Advisory Board to establish what this means for all of our members on the varying schemes.
In short summary the Government response details that:
What is positive from the response is that the Government has chosen to implement the Remedy through the Deferred Choice Underpin option, which was the option we recommended in our response to the consultation back in October 2020. This means that members do not have to choose which scheme they receive benefits from during the Remedy period until they reach retirement age and enables them to make their decision based on fact rather than an estimate.
When is the implementation?
Calculating and implementing the Remedy for each individual which will take some time. Because of this the actual implementation of the Remedy won’t be completed until October 2023 at the latest. The administrative implementation of the Remedy will not change the Remedy period (1 April 2015 – 31 March 2022) nor the date on which legacy schemes will close (31 March 2022) and all remaining members of those schemes are moved to the 2015 CARE Scheme (1 April 2022). This is a positive in the sense that it gives pensions administrators time to deliver this correctly and consistently however it is a further delay for our members who desperately need and deserve clarity around their pension, especially those who are coming up to retirement.
The important thing to note is many of the positive aspects of schemes are being retained and this is not being used as an opportunity to take away the concessions that were agreed as part of the transitional protections but were not ruled unlawfully discriminatory. For example, the link to final salary for legacy schemes has been retained.
Issue around tax
There are a number of complex issues around the need for taxation matters to be reassessed in order to return members to the position they would have been in had the discrimination not occurred. We have concerns around some of what is being proposed as a solution to these matters and will be raising them with the Home Office and Treasury.
Whilst it is positive that the Government has chosen to use deferred choice to implement the Remedy, it is disappointing that those who are due to retire soon still don’t have the clarity they need and deserve to be able to make a decision about their retirement.
We will be involved in the consultation on the primary legislation and will be seeking legal advice on certain aspects of the implementation throughout the process. In particular we are scrutinising the updated Equality Impact Assessment to ensure that no unjustifiable discrimination is caused as a result of remedying the existing discrimination.
You can find Q and A’s with more information here.
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What are the police pension schemes?
Police pensions have undergone a number of reforms since their introduction in the 19th century, the most recent of which was in 2015, when The Police Pension Scheme 2015 was brought in. Details of how the 2015 scheme works can be found in our FAQ document issued in March 2015.
Currently our members are in one of three schemes – the Police Pension Scheme 1987 (1987 Scheme) which was available for members who joined before 6 April 2006, the New Police Pension Scheme 2006 (2006 Scheme) for those who joined between 6 April 2006 and 31 March 2015 or the 2015 Scheme.
The 2015 Scheme came into effect on 1 April 2015. This is a Career Average Revalued Earnings (CARE) scheme, and brought about one of the biggest changes to police pensions in history. The introduction of the 2015 Scheme implemented the government’s policy of moving public service pensions to CARE arrangements and away from final salary schemes like the 1987 and 2006 schemes. Primary legislation was used to avoid a “no worsening” provision contained the Police Pensions Act 1976.
What did PFEW do when the 2015 CARE Scheme was announced?
We had no right to negotiate over the introduction of the 2015 Scheme, so instead engaged in consultation. We have produced a timeline outlining that process. You can also read more about what we have done.
Our view was that the 2015 Scheme should only apply to new recruits. This was rejected, but we supported the use of transitional arrangements - as did the trade unions involved with other public service workers - to improve the position for as many of our members as we could. We obtained legal advice throughout the process.
More than 49,000 of our members at the time of the introduction of the 2015 Scheme on 1 April 2015 received full protection and remain in their original scheme, while a further 18,000 have tapered protection, which means that they have gradually been moved over or will be in the future from the 1987 or 2006 scheme to the 2015 scheme. Pension accrued in the 1987 or 2006 schemes before being moved over to the 2015 scheme are protected.
Why did PFEW not legally challenged the pension changes?
When the new pension scheme was introduced, a group of officers decided to put in their own legal challenge to the transitional arrangements. The Federation’s legal advice strongly advised that a challenge was unlikely to be successful and we also believe that the transitional arrangements are a good thing.
We have also produced additional FAQ on pensions which includes further information, along with a timeline of our work to provide clarity on what we have done throughout the process. Police pensions remain a priority for the Federation and we are committed to ensuring the best provision for our members.
Where can I find out more about the police pension schemes?
Details on each scheme are available here:
• 2015 Scheme (current scheme, for officers who joined the service on or after 1 April 2015 and for those who were moved across from the 1987 and 2006 schemes)
• 2006 Scheme
• 1987 Scheme
More information is available on the police pension scheme pages of gov.uk.
Got more questions?
The Police Pension Schemes are administered locally by each police force. If there are any points about which you would like further help, please contact the pensions’ administrator for your force.
If you are not sure where to find the pensions administrator for your force, your human resources or personnel section should be able to provide the right contact. Alternatively, there is a full list of the pensions’ administrators for all forces in England and Wales on the gov.uk website.