Guidance

Police officer voluntary exit scheme guidance 2018

Published 12 July 2018

This guidance advises recipients of the police officer voluntary exit scheme following amendments to regulations that came into force on the 22 May 2018: Police Pension Schemes and Additional Voluntary Contributions (Amendment) (England and Wales) Regulations 2018; and the amended Annex DA of the determination under regulation 14A of the Police Regulations 2003.

Voluntary exit scheme

1) It is for Chief Officers and Police and Crime Commissioners (PCCs) to decide whether to run a voluntary exit scheme in their force and to determine, within the terms outlined below, what criteria for eligibility to apply are appropriate. If a scheme is run, it is for those officers who fall within the criteria of those eligible to apply to decide whether the terms of the offer are right for them. Only if both sides agree to the terms and are satisfied that they are suitable should the exit proceed.

2) The determinations setting out the level of compensation and the April 2018 amendments are located with this document on the gov.uk website.

The level of compensation and the rate at which it accrues

3) For those below their pension age on their final day in service: 3 weeks’ pay for every year of service up to a maximum of 18 months’ pay.

4) For those above their pension age but with less than 30 or 35 years’ service on their final day in service: 3 weeks’ pay for every year of service up to a maximum of 6 months’ pay.

5) No compensation payments are available to those who have built up full pensionable service (30 years for Police Pension Scheme 1987, 35 years for New Police Pension Scheme 2006). This does not apply to those in the Police Pension Scheme 2015, where there is no concept of full pensionable service.

High pay threshold

6) A high pay threshold is set at the level of six times the median earnings figure provided by the Annual Salary Hourly Earnings (ASHE) ‘Private Sector Annual Pay: Gross’ (full-time earnings) table. The threshold is set at £149,820. All those earning more than the threshold (on a full-time equivalent basis) will be deemed to be earning the threshold figure for the purpose of calculating their compensation payments.

Early access to pension

7) For most police officers, the minimum pension age is the same age at which they could receive a normal, unreduced pension anyway. In these circumstances the option of early access to pension is not available.

8) However, there is a small group of Police Pension Scheme 1987 officers for whom the minimum pension age is below the age at which they could receive a pension: those at the rank of inspector and above in all forces other than the MPS who are aged over 55 with less than 25 years’ service.

9) Officers with Police Pension Scheme 2015 membership are able to draw their 2015 pension unreduced at age 60, but can also take it from age 55 (the normal minimum pension age) with reduction.

10) Officers within these categories with 2 years’ qualifying service can draw their pension early. The compensation payment can be sacrificed to minimise actuarial reduction. If the compensation payment is not enough to meet the full cost of buying out the pension reduction then it is at the discretion of Chief Officers, working with their Police and Crime Commissioners, whether to top up the compensation payment to meet the cost of buying out the reduction, up to any wider public exit payment cap restrictions in force. If the police force does not pay, the officer must pay the difference themselves.

Part-time working

11) For the calculation for part-time officers’ compensation, length of service would be based on actual hours worked and pay would be the full-time equivalent salary.

12) The maximum compensation that an officer who has worked part-time in the last three years could receive would be scaled back relative to the maximum for a full-time officer, taking into account the reckonable service of the part-time officer. This would ensure that part-time officers do not receive disproportionately more than full-time officers.

Re-employment in the Police Service

13) Officers receiving compensation payments will be required to undertake to make pro rata repayments if subsequently re-engaged in a paid role within the police service (whether that be as a police officer or otherwise) within the lesser of (a) six months and (b) the notional period of the compensation payment.

Eligibility to apply

14) Chief Officers, working with their PCCs, would have discretion to decide what additional criteria are appropriate to determine which officers should be eligible to apply. Forces will, of course, be expected to give due regard to the equalities impact of any criteria that they deploy.

15) The following officers will not be eligible for the scheme:

a. those going through any misconduct proceedings (note that this covers the period between the allegation of misconduct coming to the attention of the appropriate authority and the misconduct proceedings being concluded) or who have been found guilty of gross misconduct in the previous 12 months before the voluntary process is initiated

b. those who have reached stage 3 under unsatisfactory performance procedures (UPP) in the previous 12 months before the voluntary process is initiated; and

c. those who have built up full pensionable service, who could retire with a full pension or be required to leave under the powers provided by Regulation A19 (this does not apply to 2015 scheme and transitional protection members).

16) The presumption should be that those found guilty of misconduct short of gross misconduct should also not be eligible for the scheme. However, there may be cases in which an officer has been found guilty of a less serious incident of misconduct where Chief Officers working with their PCCs feel it would be acceptable to offer the officer the opportunity to leave under voluntary exit arrangements. They are able to use their discretion in this respect.

17) If an officer is excluded from a voluntary exit scheme because he or she is under investigation for misconduct and he or she is then cleared of misconduct or gross misconduct, Chief Officers working with their PCCs have, for a period of 30 days following the conclusion of the misconduct proceedings, the discretion to offer that officer the opportunity to apply for a voluntary exit.

18) If an officer is excluded because he or she is under investigation for misconduct and he or she is then found guilty of misconduct short of gross misconduct then the presumption should be that the officer is not eligible for the scheme. However, if Chief Officers working with their PCCs feel that it would be acceptable to offer the officer the opportunity to leave under voluntary exit arrangements then, for a period of 30 days following the conclusion of the misconduct proceedings, they can use their discretion in this respect.

19) If an officer is excluded because he or she is awaiting a stage 3 UPP meeting for suspected gross incompetence and it is decided at the hearing that the officer’s behaviour did not constitute either gross incompetence or unsatisfactory performance, Chief Officers working with their PCCs have, for a period of 30 days following the meeting, the discretion to offer that officer the opportunity to apply for a voluntary exit.

Tapering

20) The maximum compensation that can be paid to a member over pension age is six months’ pay. To avoid a “cliff edge” at pension age compensation for those approaching pension age will be tapered. The maximum compensation payable will be the lesser of:

• the normal maximum for those under pension age; and
• 3 weeks per month until pension age, plus six months.

Any part months will be rounded to the nearest full month.

21) A similar pattern of tapering will apply to those approaching maximum service, to reflect the fact that those with maximum service are not eligible for any compensation payment. This will not apply to 2015 scheme (including transitional protection) members, where the concept of maximum service does not apply.

22) In general, tapering will work so that every month an officer is away from reaching his or her pension age, he or she will be entitled to another 3 weeks’ pay in addition to the 6 months those who have reached pension age are entitled to (up to the maximum tariff he or she is eligible for). There is also a special taper as officers get close to full pensionable service: for every month away an officer is away from reaching full pensionable service, he or she will be entitled to a 3 weeks’ pay as compensation (again, up to the maximum tariff he or she is eligible for). This reflects the fact that officers with full pensionable service are not entitled to compensation payments.

23) Part-time officers’ compensation payments are subject to pro-rating.

Notice period

24) Exits under the scheme will be subject to three months’ notice. Notice will commence from the date the officer signs the agreement to depart.

Definitions

Pension age

25) For the purposes of the voluntary exit scheme, the pension age is the age at which the individual would be eligible to receive their ordinary pension assuming that they left the service on the agreed date for voluntary exit.

Pay

26) Pay will normally be determined as the full-time rate of pensionable pay at the last day of service. If the selection criteria used by a force are such that officers currently not receiving pay are eligible for voluntary exit - e.g. if they are on a career break or longer term sick leave - then the compensation payment should be calculated on the basis of their pay they would have been entitled to had the period of unpaid leave not been taken (in much the same way as average pensionable pay is calculated).

Tax

27) Under current tax law, the first £30,000 of a compensation payment will be tax-free. Normal tax rules will apply to payments in excess of this.

Cap and ‘clawback’ provisions on public sector exit payments

28) In 2016 the government committed to introduce a cap on all public sector exit payments and a ‘clawback’ of redundancy compensation when a highly paid individual returns to the public sector shortly after receiving an exit payment. This guidance will be updated once the regulations are laid.

Worked examples will be added to this guidance in due course.