Guidance

The benefits of your police pension scheme (accessible version)

Published 15 December 2021

A brief guide on the value of membership

For all members who have joined the 2015 scheme on or after 1 April 2015.

This is a guide to the range of benefits available to you as a member of the PPS, to help provide financial security for you up to retirement age and beyond. It explains how the Police Pension Scheme 2015 (PPS 15) works and how you can make the most of your membership.

This guide reflects the current regulations and is intended to explain the main details in simpler language than is used in the regulations, although it must be remembered that nothing in this guide can override the regulations.

Your police pension

A pension scheme is a plan or arrangement to help save for retirement. It will provide a regular monthly income during your retirement and is payable for the rest of your life.

When a member of the Police Pension Scheme (PPS) reaches their retirement age, they receive one of the most valuable pensions available in the United Kingdom (UK). This reflects the unique nature of police service and the responsibilities that society expects of police officers during their careers.

The PPS provides protection and value for money for you and your dependents. The majority of the cost of providing the range of benefits is met by your force in its employer role, so it’s an extremely valuable and important part of your remuneration package.

More detailed information is available on GOV.UK.

There are currently three schemes:

• Legacy: Police Pension Scheme 1987 (PPS 87)
• Legacy: New Police Pension Scheme 2006 (PPS 06)
• Reformed: Police Pension Scheme 2015 (Career Average Revalued Earnings or ‘CARE’ or PPS 15)

The PPS 15

About

The PPS 15 is a defined benefit scheme. It provides a guaranteed income you can claim when you retire. It came into effect on 1 April 2015 and provides substantial benefits for you and your dependants and provides financial security in service and in retirement.

Benefits

The PPS 15 provides:

• a pension for you in retirement
• an optional lump sum on retirement
• special provisions if you are forced to retire through ill health
• income for your dependents after your death
• a lump sum on death in service

The amount you receive is based on your ‘averaged’ salary across your time in the scheme. Your employer will pay around double the member contribution. Unlike many private pension schemes, the monetary amount of the contribution does not directly determine the size of the pension.

The pension keeps paying however long you live and not everyone will get the same amount. It doesn’t stop because you have exhausted the contributions paid in.

Visit the members guidance to find out what you could receive and the earliest you can claim it under the current rules.

Membership

Eligibility

All members of the police service who joined from 1 April 2015 are members of the PPS 15. This scheme is open to new members.

Mixed membership

Members who joined the pension scheme prior to April 2015 will have membership of the legacy PPS 87 and PPS 06 – the PPS 87 closed in April 2006 only to new members. Therefore, a high proportion of scheme members will have membership of more than one pension scheme, referred to as ‘mixed membership’.

There are a number of important features to legacy schemes including ongoing legacy scheme protection and accrued rights that members should be aware of:

Ongoing final salary link

Essentially your legacy pension will continue to be uprated in line with your final salary up until the point of retirement.

Ongoing double accrual

Ongoing double accrual on your PPS 87 pension will be applied such that you can still attain an overall accrual rate of 1/45, on this part of your pension membership, assuming you complete 30 years’ scheme membership.

For example, a member with 15 years’ PPS 87 service would have built up a pension of 15/60 of Final Salary (if the Final Salary was £42,000, then the annual pension would be £10,500).

However, if the member continues until 25 years, this becomes 15/50 (a pension of £12,600), and if the member continues on until 30 years, this becomes 15/45 (a pension of £14,000). Any pension accrued in the PPS 15 will be paid in addition to these pension amounts.

Legacy scheme retirement age

You retain the ability to retire in line with your legacy scheme retirement age (minimum retirement age and normal retirement age). However, as you are also a member of the reformed 2015 scheme which has a different retirement age, you will want to understand the impact of retiring on your PPS 15 membership and particularly the level of actuarial reduction that may be incurred.

The content above does not apply to those members who have sole 2015 membership and new entrants to the PPS 15.

Key features of your pension

A summary of the main points you need to know about your PPS.

Auto enrolment

Your employer is investing in your future through a government initiative known as ‘auto enrolment’.

Membership of the PPS is voluntary but if you are eligible you will automatically be enrolled and made a member from the day you start or restart in the police service, unless you decide to opt out after joining. For more information, please contact your local pensions administrator.

How your pension works

Your pension builds up over your career to provide you with an income at retirement, which will be based on the total value saved into your personal pot. 1/55.3th of your pensionable earnings is added to your pension at the end of the scheme year (31 March). So, for example, if your pensionable earnings were £55,300 in the year, £1,000 would be added to your pension ‘pot’ in that year.

The normal retirement age of the scheme is 60. You have the option to retire at any time after minimum retirement age (currently age 55) and take immediate payment of your pension, but it will be reduced to reflect that it will be paid for longer. The reduction to the amount payable is roughly 5% for each year that you retire before 60 (the actual reduction is based on actuarial calculations which are updated periodically).

If you leave service before age 55, payment of your PPS 15 pension is deferred to State Pension age – currently 67 or 68 for younger members. For example, the state pension age for members born after 6 April 1978 is 68. However, the pension age for those born before April 6 1970 remains at 67 years and, for those born between April 6 1970 and April 5 1978, varies between 67 and one month and 68, depending on their date of birth.

Contribute into your pension with the PPS 15 and your employer contributes with you – and you get tax relief on your contributions too. Once you are ready to retire, the pension that you have accumulated will provide an income for the remainder of your life.

Amount you will get

The cash balance of your pension is carried forward to the next scheme year. CPI (which can be either negative or positive) + 1.25% is applied to your total pension balance at the start of each scheme year.

Assuming a salary of £55,300 and not allowing for annual revaluation, if you worked for 10 years with the same pensionable pay, you’d have £10,000 in your annual pension. If you worked for 20 years, your pot would be £20,000. If you worked for 30 years, your pot would be £30,000 i.e. the pension payable after 30 years’ membership at your pension age of 60 would be £30,000 which is 54% of your salary of £55,300.

Annual pay increases and the built in annual uprating of benefits would mean that, in practice, the pension calculation is more complex than demonstrated above. The actual pension payable and how that compares to your salary at retirement depends on pay awards, career progression and inflation (which affects uprating).

For example: in the first year of active membership an officer working full-time earning £21,000 would accrue a pension worth £379.75 per annum (i.e. 1/55.3 of £21,000). If that officer remained an active member of the PPS 15 for thirty years before retiring and during that period the annual movement in the CPI remained at a constant 2%, then at retirement that block of pension will have become worth £991.28 per annum.

If you cease to be an active member of the PPS 15 then your combined blocks of pension accrual will continue to be increased annually until your retirement by the movement in CPI only (i.e. CPI plus 1.25% only applies whilst you are an active member).

Cost of your pension

As a member the amount you pay towards your pension depends on how much you earn; the more you earn, the higher your contribution rate may be. Your contributions are deducted from your pay before tax is applied - meaning you get income tax relief on your contributions.

In the PPS 15, the benefits that you are earning are worth much more than the contributions that you are making. The police force (as the employer) make contributions at roughly double your contribution to make up the balance of the cost of your benefits.

The member contribution rates are different for each scheme.

The current (1 April 2020 – 31 March 2023) earning thresholds and contribution rates used to calculate contributions for the PPS 15 is shown in the table below:

Annualised rate of pensionable earnings	Current PPS 15 member contribution rate
£27,000 or less	12.44%
More than £27,000 but less than £60,000	13.44%
£60,000 or more	13.78%

Contributions payable to the PPS 06 are between 1% and 1.5% lower and those payable to the PPS 87 are between 2.2% and 3.25% higher.

Tax relief

Contributions will be deducted from your earnings before you pay tax. For example, at a tax rate of 20%, every £10 of contributions only costs you £8. The extra £2 is tax relief from the government. It may cost you less if you pay tax at a higher rate.

Benefits of your police pension

This section is more suitable for those with membership in the PPS 15 and new entrants in the scheme and less suitable for those with PPS 87 and PPS 06.

Financial cover

The contributions payable to the PPS 06 are between 1% and 1.5 % lower and those payable to the 1987 scheme are between 2.2% and 3.25% higher. See exact contribution rates in the PPS 15.

Benefits for dependants

The PPS 15 doesn’t just provide you a pension, you also get valuable financial cover for you and your family during your service.

The following assumes that you have at least three months’ qualifying service.

Death while an active member

1. Lump sum death benefit

If you die as an active member (i.e. a member who is paying into the scheme), a lump sum payment of three times your annual pensionable pay at the time of your death will be paid to your surviving spouse or civil partner. If you work part-time, the lump sum will be three times actual pensionable pay.

If you wish to nominate a potential recipient of the lump sum death grant in the event of you dying without leaving a surviving spouse or civil partner, you should contact your force’s pensions administrator.

2. Pension benefits

Your adult dependant (i.e your spouse, civil partner or registered partner) will receive a pension for life of half the ill-health pension that you would have received if you had been permanently disabled for regular employment at the time of your death.

A dependant child will receive a pension equal to one quarter of your pension at the date of your death. If you leave three or more children then they will share half of your pension between them. These child pensions cease (in almost all cases) by age 23 at the latest, earlier if not in full-time education or training. The exemption is for a child who was dependent on you who has a permanent impairment that means that they are unable to work.

If, when you die, the various payments from the scheme (excluding the lump sum death benefit) are less than your total pension contributions, an extra award equal to the balance will be paid to your estate.

3. Death in retirement

If you die while you are receiving your pension, your adult dependant will be paid half the pension you were receiving at the date of your death.

A pension will be paid of one quarter of the pension you were receiving at the date of your death to a dependant child. If you leave three or more children then they will share half of your pension between them. These child pensions cease (in almost all cases) by age 23 at the latest, earlier if not in full-time education or training. The exemption is for a child who was dependent on you who has a permanent impairment that means that they are unable to work.

4. Death or injury while on duty

If you die as a result of an injury, your dependant may also be entitled to benefits under the Police (Injury Benefit) Regulations. This does not form part of the pension scheme.

Monthly cost

The total cost of the benefits that you earn in any year in the PPS 15 depends on several factors, including your salary, age, gender and career progression.

Your contribution to the total cost is set depending on your salary band. For an officer earning £41,000 per year, their contribution rate is 13.44%, so their monthly contribution (after tax relief) is £367.36.

Your force (as your employer) pays contributions at a level around double those made by you to meet the balance of the cost of your benefits.

Retirement lump sum

You can give up part of your pension (up to one quarter) to get a lump sum when you retire. Every pound of pension that you give up will be paid as £12 lump sum.

A 30 year old constable starting in April 2021 in the PPS 15, who remains a constable until retirement at age 60 could retire with a tax free lump sum (in today’s money terms) of:

• £70,000 if annual pay awards equal CPI increases
• £100,000 if annual pay awards exceed CPI by 2%

These calculations have a starting salary of £21,400, increasing through the pay scale annually to a salary equivalent, in today’s salary terms, to £41,130 after 8 years where it remains until retirement after 30 years.

Return on investment

Rather than joining the PPS 15 you could invest the equivalent of your contributions to provide a pot of money at retirement. In this scenario you would not benefit from the employer contributions that are paid to the scheme on your behalf.

The fund that you could build from these investments at 5% annual return would be sufficient to roughly match only the first 10 or so years of payments that you would be eligible for from the pension scheme. Your payments would run out sooner if you were to achieve annual investment returns lower than 5%, or would last longer if you were able to achieve annual investment returns in excess of 5%.

The pension scheme will pay you for the remainder of your life and will provide benefits to any surviving partner on your death.

Comparison with insurance company terms

Your contributions in the PPS 15 are less than 14% of your salary.

If you were to save outside of the scheme, and achieve 5% per annum investment return on your investments, you would need to contribute significantly more (around 60% on current annuity pricing) of your salary to enable you to purchase an annuity with matching increases in retirement and dependant pension payable on your death in retirement. You would also not have certainty about the benefits that you would be able to purchase at retirement, since annuity pricing is set by insurance companies and is affected be many factors.

In addition, you would need to make separate provision for the ill health pension and death benefit cover that comes with the PPS 15, which would have additional costs.

Retirement age

Your normal pension age in the PPS 15 is 60, but you don’t necessarily have to wait until age 60 to retire. You can apply to take your benefits at any time after age 55, but they will be reduced to reflect that you are taking them before age 60.

If you were in the PPS 87 before joining PPS 15 then you can still retire on reaching your PPS 87 voluntary retirement age and if you retire before age 60 your benefits in the PPS 15 will be reduced to reflect that you are taking them before age 60.

You also retain the option to retire on completing 25 years’ service if you are age 50 or over or after 30 years’ service. If these events occur before you reach age 55, your PPS 87 benefits would be able to come into payment whilst your PPS 15 benefits would be deferred with payment from State Pension Age (SPA), or any time from age 55 with reduction to reflect that you are taking them before SPA.

If you were in the PPS 06 before joining PSS 15 then you can still retire from age 55, with a reduction in your PPS 15 benefits if you are taking them before age 60.

If you are ill-health retired from the PPS 15, you may be able to retire before age 55 without any actuarial reduction applied to your benefits.

Further information

You can get further information on pensions and savings on The Money helper website.

If you have any queries about the basic principles of the PPS, you can obtain further guidance from your pensions administrator or our website.

Your pensions administrator is responsible for the assessment, award, payment and maintenance of all police pensions.