The New Police Pension scheme (NPPS) comes into effect on the 6th April 2006. We understand that it is the intention of the MPS before that day, to send personal letters to each and every serving officer, highlighting this fact and offering them the opportunity to “switch” to the new scheme.

There are by common consensus five main reasons why an officer may wish to change and  a brief synopsis of these is shown below. However it is important that we stress  - if you  think that any of the five reasons might apply to your circumstances, you should consult an Independent Financial Advisor (IFA) before acting.

The Five reasons

1. Lower contributions – Members of the existing scheme pay 11% of gross pay. That reduces to 9.5% in the new scheme. This may initially be attractive to younger officers struggling with outgoings but remember it is an unassailable truth in pension’s terms you get out what you put in. The reduced amount generally means reduced benefits.

2. Adult survivor benefits- Cohabitees- The existing scheme pays adult survivor benefits to your Spouse through marriage & Civil partners after a civil ceremony. The NPSS provides for Cohabitees, subject to stringent conditions. So if a member of the existing scheme is Cohabiting with someone whom they would like to provide for in the event of their death. Then maybe the NPSS is for them. However the conditions applied to this provision are quite imposing and unless someone has a moral or ethical objection to marriage or Civil partnership they are probably better staying within the existing scheme.

3. Life-long adult survivor benefits- with the current system if your spouse or civil partner re marries, for want of a better all inclusive term, after your demise they would lose the widows (survivors) pension. With the NPPS they don’t. It is paid for life irrespective of re marriage.

4. Improved death in service grant- The current system pays twice your salary, the NPPS three times. Both 4 & 5 are good news for your surviving benefactors but not much use to you!

5. Single accrual- You are probably aware that within the existing scheme the ten years service between 20 to 30 years counts double towards your final pension. You get 2/60 ths in years 20 to 30, as opposed to 1/60th for years 1-19 inc. Well for some late joiners who can’t take full advantage of the “double” years or those not intending to stay around long enough to take advantage of them, Single accrual may be advantageous.

The Downside

Another fact that is agreed by all parties is that the NPPS is not as good as the existing scheme. So here are the main reasons not to switch

1. In the NPPS  you have to do 35 years service to get a full pension

2. In the NPPS the Pension age is 55 and if you leave before that in normal circumstances i.e. not ill health, you have to wait until your 65 to get it!

3. In The NPPS maximum pension is 50% of final salary (existing scheme is 66.6%)

4. In the NPPS there is a two tier ill health benefits scheme which will undoubtedly reduce benefit to many.

The Options exercise

There will be a three month ‘window of opportunity’, which we anticipate will be between October & December this year, during which those wishing to switch between schemes can do so.

So there is no immediate rush. No one needs to panic into making life changing decisions. There is plenty of time for calm consideration after receiving the appropriate advice.

During this ‘window’ transferees will be given a better transfer rate for the funds they have already built up in the existing scheme than they will get after December 2006.

 Footnotes.

1. Members who aren’t currently paying contributions to the existing scheme and yes there are some - Need to opt back in ASAP & before 6th April or they can only join the new scheme.

2. If a member of the existing scheme opts out of it post 06/04 they can only rejoin the NPPS.

3. Members of the existing scheme can rejoin it after taking a career break, provided it is unpaid leave. Those who leave on "resign & rejoin" Career breaks cannot rejoin the existing scheme after 6th April.

4. Transferees between Home office forces including Scottish forces & PSNI remain within the existing scheme as it is treated as unbroken service. Note BTP are NOT a Home office force.

5. Those currently within the existing scheme & who have no wish to switch, NEED DO NOTHING. There is nothing within the NPPS that affects their entitlements and there are currently no plans to our knowledge, for anything that will but for those of you nearing retirement please read the other pensions related item on the news page