Retirement and the benefits you receive
The amount of your retirement benefits and the date on which they become payable will depend on your age, final pensionable pay and length of pensionable service.
Retirement age
If you have 25 years’ pensionable service across both the 1987 and 2015 scheme, you can retire with an ordinary pension paid immediately on retirement once you reach age 50 in respect of your 1987 pension scheme. The benefits accrued in the 2015 scheme will be deferred until a later date. If you have 30 years’ pensionable service, you may retire with an immediate pension before age 50 and receive payment of the benefits accrued in the 1987 scheme with the benefits in the 2015 scheme being deferred until a later date.
Average pensionable pay
Your pension benefits are calculated based on your average pensionable pay, which is normally your pensionable pay for your final 12 months of service. If your pensionable pay in one of the preceding two years was higher, then this will be used instead.
Example 1:
Alex retires at the end of 2007. He was given temporary promotion in 2006. His pensionable pay in the three years prior to his retirement has been:
2005 £37,000
2006 £45,000
2007 £40,000
His average pensionable pay, for calculating his pension, will be his 2006 pay. Average pensionable pay is always taken to be full-time pay, even if you work part-time. If you work half-time for a year, for example, your final pensionable pay for that year is the full-time rate (but you will only be able to count a half year’s pensionable service).
Pensionable service
This is the service that counts in the calculation of your pension. This includes:
- Your current service as a regular police officer during which you have paid pension contributions into the 1987 scheme or for which contributions are deemed to have been paid (e.g. any unpaid period in the first 26 weeks of maternity leave).
- Earlier service in the same force, or in other Home Office police forces (again, provided that you paid pension contributions in your earlier service and that these have not been refunded to you).
- Earlier service with a Scottish force or the Police Service of Northern Ireland, if you transferred with consent and you paid pension contributions which have not been refunded to you.
- Periods of ‘relevant service’ under section 97 of the Police Act 1996 (this includes appointments to the Inspectorate of Constabulary and certain types of overseas service) during which you have paid pension contributions. (Officers contemplating overseas service are recommended to seek advice on the pension position before agreeing to undertake it.)
If you have pension benefits in the scheme of a former employer or in a personal pension plan you may be able to transfer them into PPS. The transfer value will buy a credit of pensionable service in PPS. Your police authority has discretion to refuse a transfer if it is deemed to be insufficient to cover the cost of any Guaranteed Minimum Pension to which you may be entitled (if you had been employed in the period 1978 – 1997).
Part-time working and pensionable service
Approved part-time working is counted as pensionable service on a pro-rata basis based on actual hours worked as a proportion of full-time work whilst the PPS 1987 scheme. Your pension contributions are also collected on a pro-rata basis (i.e. 14% of the part-time pay).
Example 2:
Bethan’s full-time pensionable pay would be £30,000 but she is working half-time. She therefore receives £15,000 salary and pays pension contributions, at 14% of that, of £2,100. Each year that she serves half-time and pays pension contributions adds half a year to her pensionable service whilst she is in the PPS 1987 scheme.
Benefits on retirement
You will receive a pension for life plus, if you choose to commute part of it, a tax-free lump sum. Your police pension (whilst you’re in the PPS 1987 scheme), is based on 1⁄60th of your average pensionable pay for each year of pensionable service up to 20 years, and 2⁄60ths of your average pensionable pay for each year over 20 years, up to a maximum of 40⁄60ths. For example, 25 years’ service gives 30⁄60ths. Each day counts as 1 ⁄365th of a year. The maximum length of pensionable service that can count towards a PPS pension is 30 years. You can exchange (‘commute’) part of your pension for a tax-free lump sum.
Ordinary pension
An ordinary pension is awarded immediately on retirement after completion of at least 25 years’ pensionable service. If you have 25 years’ pensionable service across both the 1987 and the 2015 schemes, you may retire on an ordinary pension paid immediately in respect of the 1987 scheme benefits on retirement if aged 50 or over. However, if you have 30 years’ pensionable service across both the 1987 and the 2015 schemes, you may retire with an immediate pension in respect of your 1987 benefits before age 50. The 2015 benefits will be deferred until a later date in both scenarios.
Example 3:
Chris’s average pensionable pay is £30,000 and his pensionable service is 20 years at 1⁄60th each and 5 years at 2 ⁄60th each. His pension = (£30,000 x 30) / 60 = £15,000 per year (index linked after the first year so long as Chris is over 55).
Short service pension
A short service pension is payable immediately after completion of at least two but less than 25 years’ pensionable service if you retire at what would have been the compulsory retirement age for your rank before the new compulsory retirement ages were introduced on 1 October 2006. It is calculated in a similar way to an ordinary pension. If you were allowed to postpone your date of retirement beyond the compulsory retirement age for your rank, and you decide to leave voluntarily before you reach your new compulsory retirement date, then if you have at least two but less than 25 years’ service you will qualify for a deferred pension payable at age 60. You will not be entitled to a short service pension, which would have been payable if you had completed your extension of service.
Pension after part-time work
As mentioned above, approved part-time working counts as pensionable service on a pro-rata basis. However, your average pensionable pay is based on the full-time equivalent of what you earn.
Example 4:
Daniela is a part-time officer who has worked half-time for the full 30 years, i.e. with 15 years’ pensionable service. She can retire with an immediate pension on reaching age 50. Her average pensionable pay is £30,000. A full time officer’s pension in these circumstances would be: 40/60 x £30,000 = £20,000 D’s pension, to reflect her part-time service, is the appropriate proportion of this, i.e.: (£20,000 x 15) / 30 = £10,000 per year (index linked after the first year from 55)
Deferred pension
You are entitled to a deferred pension if you have at least two years to count towards qualifying service, and you either:
- Leave the police, or
- Cease to be a member of PPS by opting out of it, without transferring your PPS rights to another pension scheme.
The deferred pension in the PPS 19875 scheme, will be a proportion of your hypothetical pension – i.e. the pension you would have earned by the age of compulsory retirement, subject to the limit of the maximum ordinary pension. The size of your deferred pension will be the same proportion of your hypothetical pension as your actual pensionable service is of your hypothetical service – i.e. the pensionable service you would have accrued by the time of your compulsory retirement age, subject to a limit of maximum pension.
A deferred pension is payable from age 60. It may be paid earlier if you become permanently disabled from performing the ordinary duties of a police officer. If you leave before the age of 50 with at least 25 years service, then your deferred pension will be paid from age 50.
Example 5:
Ewan, with the rank of constable, leaves PPS after 10 years’ service at age 40 with average pensionable pay of £30,000. He could have left at age 55 with an immediate pension, by which time he would have accrued 25 years’ service – his hypothetical service – which would have given 30/60ths (as in Example 3 above). Ewan’s officer’s hypothetical pension would be: (£30,000 x 30) / 60 = £15,000. His deferred pension would be: (£15,000 x 10) / 25 = £6,000