The Scottish Public Pensions Agency (SPPA) has now published a calculator in partnership with the Police Scotland Pensions Team, the Scottish Police Federation and the Government Actuaries Department.
The complexities of the new pension arrangements have made this a particularly challenging piece of work but after considerable testing and refinement we have a high degree of confidence in the figures that are being produced.
The calculator and supporting documentation can be found on the SPPA website .
Recap on new Pension Arrangements
Prior to the pension changes being announced in 2012, in general terms, officers would have either been in the 1987 Police Pension Scheme (PPS) or if they joined after April 2006, the New Police Pension Scheme (NPPS).
The CARE pension scheme that started in 2015 impacted on officers below a certain age or service.
In 2015, SPPA wrote to all members telling them what scheme they were in and whether (and when) they would transfer to the new CARE scheme.
There are therefore 3 main groups of officers:
- Officers on 1987 and 2006 Scheme who will finish their service and retire on their old pension scheme (PPS/NPPS)
- Officers who at a date (determined by your age and service) who transfer from the PPS/NPPS to the CARE scheme. These officers will get 2 pensions – their PPS/NPPS and their CARE pension.
- Officers who joined the CARE scheme – these officers will get a CARE pension
The Calculator takes these factors into account for you.
Brief Overview of the three Pension Schemes
In the PPS you get 1/60 of your final salary for each of the first 20 years of your service. You then get 2/60 for the each of the last 10 years. On completion of 30 years’ service you will therefore get 40/60, i.e. 2/3, of your final salary. You thereafter have the option of converting a portion of it to give you a lump sum.
If however you transfer to the CARE scheme, the accrual rate will be rebalanced to even it out throughout your service, e.g. if you work for 30 years, 15 of which were on the 1987 scheme, you will get 15/45 (as opposed to 15/60) of your Final Salary Plus 15 years of CARE scheme pension.
The NPPS accrues at 1/70 per year and officers had to work for 35 years to get a maximum pension. 35/70 gives half of your final salary. In addition to this a tax free lump sum is paid out, however you can convert this to increase your pension.
If you transfer into the CARE Sscheme you will receive 1/70 for every year in the NPPS and additionally the CARE benefits you accrue.
The CARE scheme is a different model altogether. Each year a portion of an officer’s annual salary is put into a pot. The pot will increase in value (above inflation) each year until retirement. A new pot is created each year and when you retire you get the sum of all the pots back as an annual pension. You can convert a part of this to a tax free lump sum.
The complexity of the pensions will is now be becoming clear to most and we would urge members to consult with Pension Regulations or seek Professional Advice if unclear. Unfortunately and legally the SPF are unable to advise on Ppension matters.
Please also note that the Scottish CARE accrual rate is different to the rate elsewhere in the UK and benefits officers who wish to retire before 60. The Calculator will not therefore work accurately for non-PSOS officers. Officers transferring out of PSOS should also be alert that there may be a pension detriment if they move to another UK Force and they are urged to take advice.