Deferred Benefits (for former members of PPS 2006)
Your benefits will be deferred if you no longer work for the police, and your benefits have not yet come into payment. Or, you may still be employed by your police force, but decided to opt out of the pension scheme and didn’t qualify for a refund of pension contributions.
You will receive your deferred pension at age 65; however, you can choose to have your deferred pension paid at any time from age 55, with the agreement of your police pension authority.
If your police pension authority agrees to the payment, your pension could be paid before the normal payment age of 65, at a permanently reduced rate. The reduction is to reflect the fact that the benefits would be in payment for longer. Please note, survivor benefits are not affected by any reduction for early payment.
If you were dismissed, or required to resign under the conduct regulations, your deferred pension cannot be paid early unless the police authority exercises discretion to permit early payment.
You are entitled to receive your deferred pension early, without any reduction, if you become permanently medically unfit for any regular employment.
At retirement some, or all, of the automatic lump sum (calculated as 4 times the pension) may be exchanged for an increased pension for the member only – survivors’ pensions cannot be increased in this way.
HMRC Tax Rules
The PPS has to comply with rules set by HMRC. There are, for example, limits on the amount of pension and lump sum which can be taken by a pension scheme member before tax charges apply.
When benefits are due the total value must be tested against the lifetime allowance, which is set annually. If the value exceeds this limit (currently £1.03 million), tax will be deducted and paid over to HMRC.
This test is in respect of all pension benefits you may have accrued over your working life, not just PPS. You will be asked to provide statements in respect of any other pensions you may have so we can check for breaches before making payment. For more information visit: www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm080000.
PPS 2006 benefits are designed to keep pace with inflation and are index linked every April, both in deferment and after they come into payment. Deferred PPS 2006 benefits increased by 3% in April 2018, as this was the measure of increase identified by the Consumer Prices Index (CPI) in the year to September 2017.
If you left the pension scheme during 2017/18, the benefits shown will include the proportion of the 3% increase to which you are entitled to for this first year.
PPS 2006 benefits are designed to keep pace with inflation and are index linked every April, both in deferment and after they come into payment.
Transfers to other pension schemes
As an alternative to keeping benefits deferred in PPS 2006, you may be able to transfer your police pension rights to another pension arrangement, but not to other occupational or personal defined contribution pension schemes that provide flexible benefits.
You should be aware that there may be time limits that apply.
The regulations allow benefits to be transferred to another pension scheme, providing the election to transfer is signed no later than your 64th birthday. Please be aware, however, that the new scheme may have timescales of their own, particularly if it is another public sector pension scheme.
If this is the case, an election to transfer must be made within 12 months of becoming eligible to join the new scheme otherwise you will lose the right to preferential terms.
It is therefore important that if you are considering a transfer of your deferred benefits, you need to contact your new pension provider as soon as possible to confirm your eligibility to transfer and the associated timescales.
Death before payment
If you die before your benefits come into payment, there are benefits payable to eligible dependants.
Details of the pensions payable to adult survivors, as well as children, can be found in the ‘Death Benefits’ area, but in brief PPS 2006 pays dependents’ pensions to spouses, civil partners and nominated cohabiting partners (who meets the criteria to receive a partner’s pension) equal to half of your deferred pension (albeit pensions for civil partners and nominated partners will be based on your service from April 1988 only).
Please note: the unmarried partner’s nomination form is available within the ‘Death Benefits’ pages. Whilst it is no longer a requirement for this form to be completed, it is a useful document in that it informs Kier that a partner exists (assuming the your circumstances haven’t changed since the form was completed!).
Entitlement to a partner’s pension will be determined following your death. Details of the criteria to be met are quoted on the form
PPS 2006 does not pay a death grant (lump sum) following the death of a deferred member.
If a court has issued a Pension Sharing Order, your pension, lump sum and survivors’ benefits are reduced to reflect the percentage of their pension rights allocated to their ex-spouse.
As an alternative, a court could issue an Earmarking Order, that also awards pension rights to an ex-spouse, but these do not take effect until your benefits come into payment, and is therefore not taken into account in the annual benefit statements we produce.
Re-joining the Police Service
If you re-join the police service (or recommence pension contributions if you are still in service but had opted out of the pension scheme) you will be eligible to re-join PPS 2006, or will become a member of PPS 2015, depending on your age and how long ago it was since you left PPS 2006.