For those over pensionable age, you have worked hard over the length of your service and as you approach the next chapter of your life it is important that you understand how much income you are likely to receive from your police pension or your police staff pension.
You may be planning to pay off a mortgage, take a long holiday or simply use your pension to pay the bills and enjoy retirement. Either way, it is important, now, that you understand what financial position you are likely to be in.
As everyone’s position will be different, the most accurate way to do this is to contact your force’s pension provider. Your HR department will help you with this. However, in the meantime here are some frequently asked questions that we hope will assist you as you consider your choices going forward and prepare yourself for life after policing.
What will my pension look like?
Your pension will be individual to you and so it is important that you contact your pension provider, who should be able to provide you with your projections based upon your personal circumstances. There are several different pension providers and to find out which one covers your force, contact your force HR department who will be able to provide their details.
Contacts for your force’s pension administrator can also be found on gov.uk - Police pension administrator contacts: England and Wales
For officers, there is also a police pensions calculator available through the gov.uk website, which will provide you with an illustration of your projected pension benefits. This calculator should be used as guidance only, as it only provides estimates and should not be used as a basis for any financial advice.
How will my police pension affect my state pension?
When you reach state pension age you will still be able to receive your state pension in addition to your work pension. The amount of state pension you are entitled to will depend on the national insurance contributions you have made.
To receive the full state pension, you will need to have made the relevant national insurance contributions over a total of 35 years, giving you the maximum of 35 qualifying years. Don’t worry if you haven’t as you will still receive a proportion of the pension if you have contributed between 10 and 35 qualifying years.
To understand your own state retirement date, you can use the gov.uk check your state pension age calculator. This will help you understand when you are entitled to claim the state pension, how much you are projected to receive and show any shortfalls in national insurance contributions you may have.
You may still be able to make up the difference through future employment and/or voluntary national insurance contributions. All relevant information and guidance can be found on the government website.
There may be some additional government benefits that you are entitled to, but most are means tested so will take account of the income you receive from your pension/s as well as any savings and investments you may have.
Some people find themselves with additional caring responsibilities as parents or other family members become more elderly. In some circumstances you or family members may qualify for further financial support and benefits that could include:
- carers allowance
- attendance allowance
- disability living allowance
- personal independence payments
How do I budget for my pension?
Clearly your personal circumstances will be unique to you. You might be pleasantly surprised at the difference between your current take home pay and your monthly pension payments, as for starters you will no longer be paying pension contributions or national insurance.
Once you have got your projection it might be useful to review your personal and/or family incomings and outgoings. A change in lifestyle might be the ideal opportunity to carry out this exercise. Whilst you may no longer have any travel expenses you may find you want to budget for a new hobby, university fees or a long ‘bucket list’ of experiences.
To assist you there is a free budget planning tool available from MoneyHelper, which is a government-approved online advice service provided by the Money and Pensions Service, a body sponsored by the Department for Work and Pensions.
What happens if I start work again?
Many people return to work after they have retired from policing. This can be for different reasons; extra financial security, a continued sense of purpose or simply because they feel they are too young to retire. These decisions are, of course personal ones, and may have tax implications too.
Essentially you pay tax on the total income you receive that is over your personal tax allowance. You can find more about your income tax and personal allowance at gov.uk.
Your total income could include your police pension, income from savings (remember your personal savings allowance) or investments, earnings from employment or self-employment, and your state pension when you receive it. So, any income you receive in addition to your pension could change your tax position and place you in a different tax banding.
You should always seek appropriate financial advice from one or more advisers and/or your bank to understand your position, the tax implications of further employment/self-employment and ensure you follow HMRC guidance and requirements.
Police staff pensions overview
How much pension you build up in the LGPS is based on your pay. The pension you build up each year is added to your pension pot. If you joined the LGPS before 1 April 2014, you have membership in the final salary scheme. Your final salary benefits are worked out differently.
Your pension
The pension scheme after 2014 is called a career average scheme. 1/49th of your pensionable pay is put into your pension pot every year and builds as income at retirement. The more you earn each year the bigger the contribution will be.
Finding out about your pension
The member’s pension account will continue to build up in the same way every year. You can see what you have accrued on your pension statement/portal. You may have to request your pension statement from your provider or log in to your pension portal. Your statement will be updated after April in June/July for the previous tax year. You should also be able to see previous pensions prior to 2014 on your portal/statement.
If you are buying extra pension by paying additional pension contributions or shared cost additional pension contributions, the amount you buy in each year is added to your pension account.
If you join the 50/50 section of the LGPS, you pay half your normal contributions for half the normal pension build-up. Each year you are in the 50/50 section 1/98th of your pay is put into your pension account instead of 1/49th.
How benefits built up before April 2014 are worked out
The LGPS changed from a final salary scheme to a career average scheme on 1 April 2014. If you joined the Scheme before 1 April 2014, you have built up benefits in the final salary scheme.
For membership built up between 1 April 2008 and 31 March 2014 you receive a pension of 1/60th of your final pay as a pension for each year that you have paid in, and then have the option to reduce that pension in exchange for a lump sum payment.
For membership before 1 April 2008, you receive a pension of 1/80th of your final pay plus an automatic lump sum of three times your pension.
Your final pay is usually your pensionable pay in the year you leave the scheme. Pay from one of the previous two years can be used if it is higher.
If you have worked part time before 1 April 2014 your pension provider will calculate this for you and this should be reflected on your pension statement. Please visit your LGPS website/portal for more information.
Overview
You can take your LGPS pension at any time from age 55 to 75, as long as you have met the two-year vesting period. You must take your pension by age 75. If your employer agrees, you can even take your pension without leaving your job – this is called flexible retirement.
The Government has announced the earliest age that you can take your pension will increase from age 55 to 57 from 6 April 2028. This will not apply to ill health retirements. Special rules apply if you have to retire because of ill health.
For more information on the police staff pension please visit www.lgpsmember.org