Calculating your Benefits
Your retirement benefits and the date on which they become payable will depend on your age, final pensionable pay and length of pensionable service. The following information relates to those with at least 2 years’ qualifying service.
If you are a member of the 2006 Scheme, you will be able to retire from age 55 with an immediate pension. However, if you leave the Police Force with at least 2 years’ qualifying service before age 55, or if you opt out of the 2006 Scheme at any age, you will be entitled to a deferred pension which will come into payment from age 65. A deferred pension may be paid early in case of ill-health, or if you opt for it to be reduced.
You will receive a pension for life, plus a tax-free lump sum. Your annual pension is based on 1/70th of your final pensionable pay for each year of pensionable service up to a maximum of 35/70ths. The lump sum is 4 times the annual pension, but you will have the option to exchange all or part of your lump sum for increased annual pension.
An Officer’s final pensionable pay is £30,000 and his pensionable service is 21 years.
His annual pension is calculated as 21 years x 1/70 x £30,000 = £9,000 per year, which is index linked after the first year.
His automatic tax-free lump sum is calculated as 21 x 4/70 x £30,000 = £36,000.
The 2006 Scheme calculates benefits as a proportion of final pensionable pay depending on length of service. Service which counts for this purpose (pensionable service) includes:
- your current service as a regular Police Officer during which you have paid pension contributions 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 if you have transferred from another force (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.
If you transferred previous pension rights into the Scheme before this date, the additional service purchased will count towards the calculation of your benefits
Your pension benefits are generally calculated on your pay shortly before you retire i.e. your final pay.
Final pensionable pay is the greater of your:
- pensionable pay in the 12 months prior to retirement; or your
- pensionable pay in either of the 2 preceding years; or your
- pensionable pay averaged over any 3 consecutive years in the 7 years before that.
Broadly, final pensionable pay is the highest pensionable pay up to 10 years before retirement, with pay in previous years being up-rated for inflation.
An Officer transferred his service from his former Police Force to the 2006 Scheme and retires at the end of 2016. He was given temporary promotion in 2015. His pensionable pay in the 3 years prior to his retirement has been:
2016 > £40,000
2015 > £45,000
2014 > £37,000
His final pensionable pay will be his 2015 pay, up-rated for inflation.
Final pensionable pay is always taken to be full-time pay. 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 half a year’s pensionable service).
Exchanging your Lump Sum
You can exchange all or part of your lump sum for an increased annual pension. However, pensions for survivors cannot be increased in this way and you cannot exchange part of your pension for a larger lump sum.
You must give notice to do so before your intended retirement date, although it cannot be earlier than 4 months before your intended retirement date.
You cannot exchange your lump sum if you have retired with an immediate ill-health pension.
Upon retirement, the Police Force will be able to advise you on the amount of additional pension that you will gain if exchanging your lump sum.
For further information, please contact us.