The Police Pension Scheme

Home Office circular 28 / 2006

The Police Pension Scheme

  • Broad subject: Police service
  • Issue date: Tue Sep 19 00:00:00 BST 2006
  • From:
    Crime Reduction and Community Safety Group (CRCSG) - Police Workforce Reform, Police Human Resources Unit (PHRU)
  • Linked circulars:
    54 / 2005
  • Copies sent to:
    Clerks to the Police Authorities
  • Sub category: Police pensions
  • Implementation date: Tue Sep 19 00:00:00 BST 2006
  • For more info contact:
    Rebecca Bradfield
  • Addressed to:
    Chief Officers of Police (England and Wales)

Dear Chief Officer

The purpose of this circular is:

To clarify the arrangements for recharging in respect of police officers seconded to other police forces, central units, staff associations and other bodies, and also in respect of officers in local and national posts funded by specific grant.

This circular updates and expands the information and guidance in Home Office Circular 54/2005.

John Gilbert
Police Pensions & Retirement Policy Section

1. Background

1.1. Treasurers and finance directors will be aware that a new system of financing the Police Pension Schemes was introduced on 1 April 2006. Under the new system, the cost of pensions in payment has been removed from Police Authorities’ operating accounts. Police Authorities now operate a separate pensions account for this purpose, into which are paid officers’ contributions and a new employer’s contribution. Any deficit is topped up with a grant from Central Government; any surplus is recouped.

1.2. One of the main benefits of the new system is that police forces can now account more accurately for the full operating costs of their officers including the cost of their accruing pensions. A consequence of this is that the full cost of a seconded officer is also clearer. One aim of the new system is that forces, central units and other bodies understand and take appropriate responsibility for the actual cost of the officers they have seconded to them. Therefore, while the Police Authority of the sending force retains responsibility for paying employer contributions and collecting officer contributions for police officers on secondment, these costs should be recovered from the organisation to which the officer is seconded. This Home Office Circular sets out the governing principles for such recharging and draws attention to the need to phase in such arrangements in certain circumstances.

2. Recharging Arrangements

General Principles

2.1. Police Authorities should invoice forces to whom police officers (who are members of the pension scheme) are seconded for the full cost of the officer. In terms of pension costs, this means:

  • 100% of officer’s salary
  • employer’s pension contribution (24.6% of salary)
  • an extra contribution of 1.3% of salary in certain cases (see 2.2)

2.2. Where an officer is seconded to a central body or organisation other than a police force, 1.3% should be added to the standard employer contribution of 24.6%, a total of 25.9%. This is in order to compensate the officer’s home force for the risk of having to meet the cost of ill-health retirement.

2.3. The Finance Reform Working Group, which oversaw the planning for the implementation of the new system, agreed that a top-slice of £23m should be taken from Police Grant in 2006/07 in order to give Home Office central units the necessary resources to reimburse sending forces for the increased costs of officers seconded to them (these agencies are detailed at Annex A). This means that forces are reimbursed for the full cost of officers seconded to these agencies from the beginning.

The need for phasing-in

2.4. The funding in 2.3 does not cover the pension costs of officers seconded to other bodies e.g. national police units, most public/private sector organisations, Scottish forces, PSNI and others.

2.5. There should be an orderly transition to the new arrangements. In recognition of the financial impact of the new system, short-term transitional arrangements apply in several cases. The table at Annex A sets out the recharging arrangements for 2006/07 and 2007/08.

2.6. The aim is for there to be full recharging for the pension costs of seconded police officers in all cases. The Home Office will advise of further progress towards this aim in good time.

3. Officers Funded by Specific Grant

3.1. Separate arrangements apply to officers in posts funded by specific grant (e.g. counter-terrorism grant). The officer’s home force is responsible for the payment of pension costs in these instances.

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