Pension Challenge – The Remedy
Some of our members have received letters from their force regarding the Government’s intended remedy to the unlawful discrimination caused by the transitional protections under the Police Pension Scheme 2015 (the 2015 CARE Scheme) following the Court of Appeal decision in the McCloud and Sargeant cases.
At the time of writing this blog, we’ve only seen letters from Hampshire police, but we understand that a number of forces have now contacted their pensioners along similar lines.
All the letters so far have been to pensioners who left with ill-health retirement and were on “transitional protection” (a delayed transfer to the 2015 pension scheme). The letter offers the opportunity to be reassessed at the point of retirement under the 2015 scheme instead of their original scheme (1987).
A (redacted) copy of one of the letters can be found here –
In summary, the recipient of this letter was ill-health retired after 01/04/2015 under the 1987 scheme. The pensioner would have received an enhanced ill-health pension and commutation (if requested) from the 1987 scheme.
The 2015 scheme has, the concept of a lower and upper/enhanced tier for ill-health retirement. The lower tier under this scheme is the default position, unless the Selected Medical Practitioner (‘SMP’) considers that the retiring pensioner would be unable to perform 30 hours or more a week in regular employment at some stage in the future. If this is the considered opinion of the SMP, then the pensioner will also receive the upper tier in addition to the lower tier. We have provided a number of pension calculations over the years and find that this could enhance an ill-health pension by approx 3-4K per annum (depending upon your individual circumstances).
Potentially, this sounds like an attractive proposition, but as always, the devil is in the detail, and the letters poses more questions than they answer in our opinion.
What is not clear is if the pensioner agrees to be assessed for the upper tier under the 2015 scheme, do they at this point agree to be transferred to the scheme regardless of the outcome of this subsequent assessment?
The letter states that if the pensioner is not eligible for the upper tier, they may be reassessed (again) up to 5 years after the date of their retirement (which is built into the 2015 scheme and is not part of the pension remedy). It is not clear, how the pensioner may be reassessed again, at some stage in the future for a scheme that they are not a member of, unless they have, as previously suggested already transferred prior to the initial decision being made?
If you agree to the assessment, and transfer into the new scheme, what date will you transfer to the scheme, the date of your retirement or the date that the scheme started, most likely, it will be the start date, this being 01/04/2015? This variation of date will affect subsequent calculations.
They have not made it clear to you that if you transfer to the 2015 scheme your ill-health pension will need to be recalculated to take into account your transfer date to this scheme, at which point you will have two pension pots. Some people may be be in credit, some may be in debt because of the different contribution rates of each scheme.
Not only will they back calculate your ill-health pension under each scheme, they will also re-calculate any commutation that you may have taken as each scheme has different rules.
If you are in receipt of an injury pension as well as an ill-health pension, then whilst you may receive more for your ill-health pension (which is taxed, and will be now taxed more), this will also result in a lower injury pension (which is not taxed).
Whilst it is true that once you transfer to the 2015 scheme, you may apply for the upper tier (with medical evidence) for a period of 5 years after the initial grant, the force may also choose to reassess you at any time up until Compulsory Retirement Age (‘CRA’) and remove the upper tier from your pension, so your upper tier may be short-lived.
They have stated, that you do not need to provide any further medical information at this stage, but may request this before the reassessment goes ahead, and rather worryingly state that they will store your personal data securely. Personally, we wouldn’t trust any force with our personal data, and would only supply it directly to the nominated SMP who is the only person entitled to see this information. That said, there is NO information as to whom the SMP will be, and regular readers of our blogs will know that not all SMPs are equal.
Finally, as we believe that your choices are not mutually exclusive and some choices have dependencies on other choices, you can only reach a final decision once you have that additional information. This is particularly important as the Home Office has yet to rule on some of the decisions.
So unless you know the actual (financial) benefits of requesting such a move, how can an informed decision be made bearing in mind that this particular force require an answer from you by the 30th April 2023, but state that the rules for how they calculate payments for eligible members are not expected until Summer 2023!?
Is this a case of Hampshire Police putting the cart before the horse? The information that they have put out is certainly lacking.
This is a personal decision for members, but we would advise you to fully understand what you are entering into before you agree, and without figures, we’re not sure how you would assess this?
Speaking to a qualified pensions expert must be the next step for professional advice and guidance.
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