Police pensions: additional voluntary contributions
Published 28 July 2016
© Crown copyright 2016
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This publication is available at https://www.gov.uk/government/publications/circular-0072016-police-pensions-additional-voluntary-contributions/police-pensions-additional-voluntary-contributions
The police pension (Additional Voluntary Contributions) scheme provided for additional savings to be made by making Additional Voluntary Contributions (AVCs) through Standard Life (some officers may still have arrangements through the scheme’s original provider Equitable Life). Access to the AVC scheme was closed to new members from 1 October 2010. The scheme allowed officers to regularly save into a money purchase arrangement and to take up additional life cover. Details of the AVC scheme are set out in the Police Pensions (Additional Voluntary Contributions) Regulations 1991 as amended.
Flexibilities for money purchase pension schemes came into force from 6 April 2015. Changes to pension tax rules allow individuals greater flexibility to access their pension savings from the normal minimum pension age (normally age 55). You can read more information on the flexibilities.
The police pension AVC scheme will be amended with retrospective effect so the changes that come into effect from 28 July 2016 will allow members to make use of the flexibilities set out below.
Members with uncrystallised benefits will have the option through the scheme administrator to apply the investments in their AVC fund to arrange with an insurer:
- payment of a lifetime annuity
- payment of a lifetime annuity and pension commencement lump sum
- a lump sum commutation payment that represents the capital value of the benefits in option (i) or (ii) and complies with regulations 11 and 12 of the Registered Pension Schemes (Authorised Payments) Regulations 2009
- designation of flexi-access draw-down fund for the purposes of taking income draw-down payments or payment of a short-term annuity
- payment of one or more uncrystallised fund lump sums
Those over 55 will have access to these benefits without retiring. Those under 55 will have access to these benefits if protected pension age applies; and they are taking all benefits (retiring). All benefit payments must comply with the requirements of the Taxation of Pensions Act 2014.
Members considering using the flexibilities should seek appropriate advice prior to using them. One option is Pension Wise, a free and impartial government service that helps members understand the new pension options.