Police pensions – current reforms

The Police Pension Scheme is a public service pension scheme, providing pensions based on final salary. Like most of the other main public service schemes, it operates on a pay-as-you-go basis. Until April 2015, there were two schemes: the Police Pension Scheme (PPS) 1987, which closed to new entrants from April 2006 and the New Police Pension Scheme (NPPS) 2006, for new entrants from that date.

The current Government has introduced reforms to police pensions, along with other public service schemes. As a first step, it decided to use the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI) as the measure of prices used to increase pensions in payment. It then announced an intention to increase member contribution rates by an average of 3.2% over the three years to 2014/15.

Following a review by Lord Hutton’s Independent Public Service Pensions Commission, the Government legislated in the Public Service Pensions Act 2013 to establish a new framework for new public service pensions to be introduced from April 2015 providing pension benefits based on career average revalued earnings rather than final salary. Under the Act, new public service schemes are to be introduced from April 2015, with transitional protection for those ‘closest to retirement’. The new schemes for the police, firefighters and armed forces are to have a normal pension age of 60.

The details of the proposed final agreement for reform of police pensions in England and Wales were announced in September 2012 (HC Deb 4 September 2012 c19-22WS. Regulations and detailed guidance were published in March 2015. The design of the new scheme in Scotland is to mirror that in England and Wales.

This note concentrates on the reforms to the scheme introduced by the current Government. The development of the two existing schemes – the PPS and NPPS – is discussed in Library Note SN 700 Police pension reform – background.