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The Police Pension Scheme (PPS)

The content of this page is based on our understanding of how pensions worked before A-Day, the 6 April 2006, and is provided for reference only.

The Government plan to introduce changes to the Police Pension Scheme with effect from April 2006 at the latest to tie in with the new pensions proposals which will come into effect on A-Day. It has been proposed that the scheme early retirement age will increase from 50 to 55 and officers will have to work for 35 years to attain maximum pension benefits.   This is currently being reviewed by the Government and may change.  The current scheme information is provided below.

Administrator

The scheme is administered locally by police authorities

Website available

As the pension scheme is usually administered locally, search for regional force and contact their finance department

Useful site: Police Pension Scheme Website

Contracted-out

Yes

Eligibility

Deferred Joining Period - No, automatic unless opts out

Minimum Age At Entry - 18 1/2

Maximum Age At Entry - No maximum age (however NRA is 55 and probationary period is 2 years – so strictly speaking 53)

Contribution basis

AVC Scheme Available - Yes

Stakeholder Scheme Available - Yes

Member Contribution - 11% p.a. of pensionable pay

Employer Contribution - Paid by central and local authority funds

Added Years permitted? - Yes, members can purchase additional years or the scheme may accept a transfer payment from a previous pension scheme

Salary definition

Pensionable Pay - Basic Salary less any overtime or allowances

Final Pensionable Pay - The highest pensionable pay in the last 3 years

Pensionable Service - From date of joining to exit date

Normal retirement benefits

Compulsory Retirement Age - age 55 for all ranks up to and including sergeant

Age 60 for inspectors and above (except for those in the Metropolitan police who retire at age 55)

Pension accrual - 1/60th for each year of service up to 20 years, then accrual rate doubles to 2/60ths up to a maximum of 2/3rds of pensionable pay

Early retirement on the grounds of ill-health

Immediate pension is calculated as for normal retirement. An enhancement is usually granted on ill-health based on service to date as follows:

  • <2yrs – payment of ill-health gratuity
  • 2-5 yrs – no enhancement
  • 5-10yrs – service doubled
  • 10-13 yrs – enhanced to 20 years
  • over 13 yrs – 7/60ths plus 1/60th for each year up to 20 years plus 2/60ths for each year over 20 years

The benefit granted must not exceed 2/3rds

Additional benefits payable due to injury or disablement

Further benefits may be awarded if the member has suffered an injury or is disabled whilst doing their job

Early retirement

If member has completed 30 years service

  • they can retire at any age without reduction, the earliest age the member can retire is age 48 ½

If member has completed 25 year service

  • if aged 50 or above then they can retire without any reduction to their pension

Late retirement

Compulsory retirement can be postponed by no more than 5 years

Retirement lump sum

Up to a quarter of the pension may be commuted if member receives either:

  • An ordinary pension (after completing 30 years) or a compulsory retirement pension
  • A short service pension
  • An ill-health pension
  • A deferred pension coming into payment

Unless the member retires on account of age, the member can commute an ordinary pension for at least 25 years but less than 30 years pensionable service to give a maximum lump sum of no more than 2.25 times the gross annual pension (before any reductions)

Commutation factors

Commutation rates between £10.45 and £17.25 per £1 given up, depending on age and sex. Limits apply to maximum commutation

Pension increases

In line with RPI, however not payable until age 55 (exception ill-health retirement and survivors benefits)

Death before retirement benefits

Lump Sum - 2 times salary

Dependant’s pension - Maximum of 33% of final salary, increased for 1st 13 weeks payable to widow/er (this pension ceases on remarriage)

Additional benefits payable - If a member dies as a result of an injury received whilst on duty a death gratuity is payable. This is the lesser of (a) 5 times the annual rate of pensionable pay on the last day of service or (b) 4 times the total remuneration during the 12 months ending on the last day of service plus the total pension contributions paid

Death after retirement benefits

Dependant’s pension - 50% of pre-commutation pension increased for the 1st 13 weeks

Early leaver options

Transfer value - Transfer values must be made within 1 year of joining new scheme

Preserved pension - Paid up pension payable from age 60 and is calculated as a proportion of pension earned by compulsory retirement age, or payable at age 55 after 25 years service

Refund of contributions - If member has completed less than 2 years service then a refund of contributions can be paid

Treatment of pension rights on divorce

The court can order the scheme to pay all or part of the pension and lump sum. The scheme will only make payments to the former spouse when a court order has specifically instructed them to do so.

Earmarking - If the former spouse remarries, he or she will not receive payments in respect of the pension after date of remarriage, however this normally does not affect the lump sum which has been earmarked.

Pension sharing on divorce - The accrued pension rights are reduced by a percentage confirmed by the court. The former spouse is given rights in the scheme equal in value to the amount of reduction – known as the pension credit rights.

As the PPS is an unfunded public service scheme, the former spouse is not allowed to transfer their pension credit out of the PPS to another pension arrangement.

 

 

Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.


Updated 3 August 2005

 

For professional advisers only