Employee and employer contribution rates 2015 to 2016
Updated 7 September 2017
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This publication is available at https://www.gov.uk/government/publications/circular-0172015-employee-and-employer-contribution-rates-2015-to-2016/employee-and-employer-contribution-rates-2015-to-2016
This circular is intended to clarify for police forces the employee and employer contribution rates for the police pension schemes.
1. Employer contribution rate
The actuarial valuation has set the employer contribution rate for all three police pension schemes from 1 April 2015 at 21.3% of pensionable pay. The difference between the old employer contribution rate of 24.2% and the new rate will be retained by the Exchequer. This means that the police pensions top up grant will be reduced by the difference between the contribution rates of 24.2% and 21.3%. Therefore, forces should budget as though there were an employer contribution rate of 24.2% of pensionable pay for 2015/16.
2. Employee contribution rates
The employee contribution rates, as set out in the relevant regulations, are as follows:
| 1987 | 2006 | 2015 | |
|---|---|---|---|
| Tier 1 | 14.25% | 11.00% | 12.44% |
| Tier 2 | 14.25% | 12.05% | 13.44% |
| Tier 3 | 15.05% | 12.75% | 13.78% |
3. Impact on 2015/16 pensions accounting
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In the Statement of Accounts an adjustment in the Police Pension Fund Account is required. A deduction equivalent to the 2.9% difference should be made from the line in the Police Pension Fund Account that reads: “Additional funding payable by the local policing body/Police Operating Account to meet deficit/ amount payable to the local policing body/Police Operating Account in respect of the surplus for the year”.
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There should also be a note below the line stating that there is an adjustment of 2.9% to the cashflow due to a reduction in the employer contribution rate for police pension schemes in 2015/16 being reflected in a reduction in HMT pensions top up funding.
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This approach will not contradict regulations stating the format of pension fund accounts nor the percentage of pensionable pay that police forces are required to contribute to the fund. No further adjustments will be required to the accounting for pensions.
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CIPFA will be providing detailed guidance on this approach early in the next calendar year. Any technical queries should be directed to technical.enquiry@cipfa.org
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This guidance applies for 2015/16 only. Treatment of the revised employer contribution rate in future years in the Statement of Accounts will be confirmed in due course.