Police Pension Scheme cost ceiling

28 March 2012

The Government has now set the cost ceiling for the Police Pension Scheme which is given in the table below, alongside the cost ceilings announced for other schemes on 7 December 2012. The Home Secretary is currently consulting the Police Negotiating Board on the Government’s preferred scheme design.

Pension Scheme	Gross cost ceiling	Taxpayers	Employees
Police Pension Scheme (England and Wales)	28.0%	14.3%	13.7%

Source: HM Treasury following advice from the Government Actuary’s Department

Frequently Asked Questions (FAQ) on Final Cost Ceiling Announcement for police officers

What is the offer for police officers?

The Government has set a cost ceiling for police officers based on the Government’s preferred scheme design: an accrual rate of 1/57th of pensionable pay and a Normal Pension Age of 60 (subject to regular review). This sets the cost ceiling at 28 per cent of pensionable pay which reflects the fact that police officers pay relatively high employee contributions towards their pension.

The Normal Pension Age for police officers in the Government’s preferred scheme design is in line with both Lord Hutton’s Independent Review of Public Service Pensions and Tom Winsor’s Independent Review of Police Officer and Staff Remuneration and Conditions.

The offer meets the Government’s commitment that most low and middle earners working a full career will receive pension benefits when they retire at least as good, if not better, than they get now. The employer will continue to pay more towards the scheme than the workforce.

What is a cost ceiling?

Cost ceilings are set by Government and are used to provide parameters for ongoing talks with pension schemes and members’ representative bodies about final scheme designs. They are the level of total contributions from the employee and the employer that are required to meet the cost of the new pension scheme.
Pension schemes and members’ representative bodies can suggest changes to the Government’s preferred scheme design within the cost ceiling set.

Why did you delay the announcement of the police cost ceiling?

The police cost ceiling has been set following the publication of Tom Winsor’s Final Report of the Independent Review of Police Officer and Staff Remuneration and Conditions on 15 March which included a recommendation on the Normal Pension Age for police officers.

What about judges and the armed forces, are they not affected by the reforms?

Scheme design details for the judges and armed forces will be provided at a later date.

What happens next?

The Home Secretary is currently consulting the Police Negotiating Board on all aspects of the Government’s preferred scheme design proposal and will respond to any alternative suggestions. This consultation period will conclude on 22 June 2012.