Police Pension Scheme

Transcription

1 Police Pension Scheme Police Pension Scheme

2 The Payroll & Pensions Department Kent Police & Essex Police North Kent Police Station Thames Way Northfleet Kent DA11 8BD Your Annual Benefit Illustration Police Pension Scheme 1987, 2006 & 2015 Based on membership and pay as at 31 March 2018 I am pleased to provide you with an illustration of your pension benefits as at 31 March The benefit illustration provides the following information:- An indication of your benefits from the Police Pension Scheme 1987 (PPS 1987) or Police Pension Scheme 2006 (PPS 2006) as at 31 March 2018 and at the scheme s normal pension age An indication of your benefits from the Police Pension Scheme 2015 (PPS 2015) as at 31 March 2018 and projected to your normal pension age if you are a tapered protection member or unprotected member Survivor s pension and the death grant payable should you die as a current member of the Police Pension Scheme I cannot stress enough the importance of you checking the details contained in this illustration as it may not be possible to question these later as payroll records are only kept for a limited time. If you have any questions concerning the information shown, please first read the explanatory notes within your illustration. You will also find far more information on our website If however you still have a question then you can contact us using the information at the end of this booklet. John Stonestreet (MCIPPdip) Payroll & Pensions Manager Essex & Kent Directorate of Support Services Please note this is an important document and should be kept in a safe place. Copies of these illustrations cannot be provided

3 Your Details Name: Date of Birth: National Insurance Number: Payroll Number: Final Salary Pensionable Pay as at CARE Pensionable Pay as at PPS 2015 start date Police Pension Scheme at It is important that the details above are correct, as any inaccuracies will affect all of the calculations in this illustration. If any of the details are incorrect please inform the Pension Section. Pensionable Pay All benefits calculated in this illustration are based on pay figures above. It is important that you check these for accuracy and contact Kent Police if you believe the pay figures to be incorrect. Final Salary Pensionable Pay This is your whole time equivalent pensionable pay for the year to 31 March 2018 that is used to calculate your benefits under the 1987 or 2006 Schemes. The figure is based on your pensionable earnings for the year to 31 March 2018 including any allowances that are pensionable. If during the year you were receiving a reduced amount of pay due to illness, paid child related leave or on reserved forces leave the figure should not be reduced for any paid periods of absence. If you are a part time police officer the figure used is the pensionable pay you would have received if you worked full time. CARE Pensionable Pay 2015 scheme members only This is the pensionable pay for the year to 31 March 2018 on which you have paid pension contributions and is the figure used to calculate the value of your pension account for the scheme year ending 31 March The figure is based on your actual earnings including any fees you may receive in relation to your role. Please note if your Final Salary or CARE Pensionable Pay is 110,000 or more you should refer to page 15 1

4 When you leave, your benefits will be calculated using pay information provided by Kent Police. Your benefits will not be based on the estimated figure shown on this illustration. PPS 2015 start date This is the date you joined the 2015 scheme, or if you qualify as a taper protection member this is the date you will join the 2015 scheme. If you are a protected member then this field will be blank. Police Pension Scheme at This is the Police Pension Scheme you were a member of at 31 March If you qualify as a taper protected member you will move into the Police Pension Scheme 2015 on the date as stated in the previous field. Your total pension as at Total Annual Pension (including Final Salary Pension and PPS 2015 Pension if applicable) [1] Lump Sum (2006 scheme only) [2] Benefits payable on your death in service (as at ) Survivor Pension [3] Death Grant [4] 2

5 Notes relating to the numbered points [1] Annual Pension This is the total current value of your pension in this employment if you left the scheme at 31st March 2018, and which would be paid at the deferred pension age that applies to the scheme you are a member of at the date of this statement. A breakdown of how this figure has been calculated can be found on page 6. This value does not take into consideration any adjustments that may be made for the following. a. Actuarial reduction the figures quoted may be reduced if you are able to take them before your deferred pension age. b. Earmarking order if an earmarking order, following a divorce or a dissolution of a civil partnership applies to your pension benefits, the figures on the statement do not take account of the reduction to your benefits made by the order. The amount of the reduction will be calculated when you take your benefits. [2] Lump Sum This is the automatic lump sum payable to those current and previous members of the 2006 scheme. Certain members can choose at retirement to exchange pension to provide a lump sum. For more information see page 14. [3] Survivor Pension This is the amount of survivor pension that would be payable should you die whilst a current member of the Police Pension Scheme. A survivor s pension is payable to a spouse, civil partner and to a co-habiting partner in certain circumstances. As we do not know the marital status for most members, for the purposes of this illustration, we have assumed that you are married or in a civil partnership as at 31 March 2018 and the pension is based on all of your membership of the scheme. 3

6 The following may be useful in confirming the survivor s pension options Spouse / Civil Partner only Yes 1987 Scheme Yes 2006 Scheme 2015 Scheme Yes Cohabitating partner No Yes if nominated* Yes if nominated* If you are single then there is no survivor pension payable. A survivor pension can only be paid to partners of the 2006 and 2015 schemes and so if a co-habiting tapered 1987 scheme member dies before moving to the 2015 scheme no survivor s pension would be payable. The survivor s pension may be less than quoted in this illustration if you die after you have left the scheme, if you marry or form a civil partnership after leaving the scheme. A pension may also be payable in respect of any eligible children. * The 2006 and 2015 schemes provide a survivor s pension for a cohabiting partner. To be eligible you must meet several conditions which must have applied to both you and your cohabiting partner. Details regarding these conditions can be found on under the Police Pension Scheme 2006 and 2015 areas. [4] Death Grant Death in service lump sums will be calculated in the following ways: Death in service lump sum 1987 Scheme 2 x pensionable pay 2006 Scheme 2015 Scheme 3 x pensionable pay 3 x pensionable pay The amount quoted in the illustration reflects the pension scheme you were in as at 31 March For part time police officers the death grant would be based on your part time pensionable pay. 4

7 For members of the Police Pension Scheme 1987 the death grant will be automatically paid to your spouse or civil partner. If you are not married and are not in a civil partnership the death grant will be payable to your estate. For members of the Police Pension Schemes 2006 and 2015 the death grant will be paid: to your surviving spouse or civil partner if you have no spouse or civil partner at the discretion of the Kent Police Authority to a declared partner if you have no spouse, civil partner or declared partner at the discretion of the Kent Police Authority to a person nominated by you otherwise to your legal personal representative forming part of your estate If you wish to nominate someone to receive your lump sum death grant you should complete a nomination form which can be found at A nomination does not override the provision that the grant will go to a surviving spouse, civil partner or declared partner but it would take effect if you did not have any of these or if you and your spouse, civil partner or declared partner were to die at the same time. If you are either a 2006 or 2015 member and would like to know who your current nominees are please contact us using the details at the end of this booklet. If you haven t already made a nomination, or wish to amend your existing nomination, then please complete the nomination form which can be found on our website under the Police Pension Scheme 2006 or 2015 area. The following information provides a breakdown of your CARE Pension and your Final Salary Pension as at 31 March These amounts are not paid in addition to the total amount of your pension shown in the section Your Total Pension. 5

8 Amount of Final Salary PPS 1987/2006 pension as at Membership in Final Salary Scheme [5] Final Salary Pensionable pay for the year to Pension (years/days) Lump Sum (2006 scheme only) [2] Amount of Care PPS 2015 pension as at CARE Pensionable pay for the year to Pay / Additional Pension bought [6] + Transfers in [7] = Total Closing balance at 31/03/ Revaluation [8] + In Year build up (as shown above) = Total CARE Pension Notes relating to the numbered points above [5] Membership in Final Salary Scheme This is the total membership used for the calculation of your final salary benefits. It will include any membership transferred from another pension scheme prior to 1 April For unprotected and tapered members your Final Salary benefits are based on membership accrued to 31 March 2015, for protected and those tapered members that have not yet been transferred membership to 31 March If you would like to know a breakdown of your membership please contact us using the details at the end of this booklet. 6

9 For members of the 1987 scheme where membership exceeds the maximum allowable membership of 30 years, only 30 years membership will have been used in the calculation of your pension benefits shown in this illustration. For members of the 2006 scheme who have already attained the maximum allowable membership for the PPS 2006 (35/70ths) this value will be shown. Periods of part time membership will be proportioned by the hours worked. Therefore if you have worked for a total of 2 calendar years at 20 hours per week (half time where whole time week is 40 hours) your pensionable membership will be 1 year. If you are paying additional contributions to provide additional membership then the illustration includes the proportion you have paid for as at 31 March If you have any breaks in membership that you have not paid pension contributions for then these have been reduced from your membership. [6] Additional Pension bought If there is a value shown in this field this relates to any additional pension purchased in this year through the pension scheme. [7] Transfers in If there is a value shown in this field it will relate to the additional pension bought by a transfer of pension rights received from another pension scheme during the year. Any transfers received before this date will either be detailed in your Final Salary Membership details or will already be included in your CARE benefits. [8] Revaluation At the end of every scheme year the value of the pension held in your CARE pension account is revalued. Revaluation means that the value of your pension reflects the change in the cost of living. The revaluation order for the Police Scheme is based on the Consumer Price Index (CPI) %. For the 2016/2017 year CPI was 1.0% and so the revaluation was 2.25%. Projections if remain contributing to the scheme until normal retirement date Total Annual Pension (including Final Salary Pension and PPS 2015 Pension if applicable) Lump Sum (2006 scheme only) [2] Survivor Pension [3] 7

10 8 Please note these figures do not take account of any adjustments as described in point [1] Annual Pension on page 3. The figures on this statement are based on the information held on our records as at 31 March Whilst every care has been taken in producing the figures, they should not be seen as a definitive statement of the benefits payable and they may not take into account the maximum level of benefits allowed by HMRC. If there is any disagreement over your pension benefits due under the Police Pension Schemes, the appropriate legislation will apply. Explanatory notes to help you understand your Benefit Illustration Your illustration shows the value of your benefits at 31 March If you are within 6 months of your anticipated retirement age you can request an estimate, via Kent Police, to ensure you receive details of all the options available from the Police Pension Schemes. Your Total Pension as at 31 March 2018 This shows the benefits that you have earned in the scheme as at 31 March The summary includes the total of your Final Salary benefits based on any membership accrued to 31 March 2015, for unprotected and tapered members, and to 31 March 2018, for protected and those tapered members that have not yet been transferred, and your total accrued CARE pension as at 31 March 2018, if applicable. If you completed 25 years membership of the scheme during 2017/18 the pension figure may be lower than figures quoted in previous illustrations. This is because when you have 25 years membership or more your pension is calculated differently, however although the pension figure may be lower the payable date will be earlier. Value of Final Salary PPS 1987/2006 pension at 31 March 2018 The current value final salary pension is the pension that is payable if you left the scheme at 31 March 2017 and would be paid at your deferred pension age. Value of PPS 2015 as at 31 March 2018 For those members who moved to the 2015 scheme from 1 April 2015 or have subsequently tapered over this shows the total accrued CARE pension as at 31 March Projection of your pension benefits at your Normal Pension Age (NPA) This is the total value of your estimated benefits at your normal pension age, and may include both final salary and 2015 Scheme pension. The amounts do not take into consideration any adjustments as described on pages 3.

11 Taper-protected or unprotected members with benefits built up in the 1987 Scheme can retire and take their 1987 pension at the retirement age for the 1987 Scheme. The 2015 Scheme pension could be paid early, from age 55, reduced as appropriate or alternatively deferred until your State Pension age when it would be paid unreduced. Projected 2015 Scheme pension The estimated value of the 2015 Scheme pension is calculated based on the 2015 pension built up to the date of your statement, plus your estimated service from that date to your normal pension age, multiplied by 1/55.3th of your pensionable pay for the scheme year 1st April 2017 to 31st March If, at the date of your statement, you have not yet moved into the 2015 Scheme but will do so by your normal retirement age, the salary used to estimate your benefits is your current actual pay. The value of this estimate does not include any adjustment for future revaluation under Treasury Revaluation Orders. Projected value of Final Salary Pension (1987 or 2006 schemes) If you qualify as a protected member*, your estimated pension is calculated based on your service up to your normal retirement date divided by an accrual rate multiplied by your final pensionable pay at the date of this statement. The table below shows the accrual rate that applies. Accrual rate 1987 Scheme 1/60ths for first 20 years 2/60ths for each of the following years 2006 Scheme 1/70ths +automatic lump sum 4/70ths * A protected member is somebody who is protected by legislation to stay in the existing final salary scheme (1987 or 2006 Scheme), and so will not move into the 2015 Scheme. If you are a taper-protected or unprotected member, your estimated pension is calculated based on your service until you join the 2015 Scheme, divided by the relevant accrual rate (as in the table above) multiplied by your final pensionable pay at the date of this statement 9

12 10 Scheme Pays and Pension Sharing Orders If you have at any time exceeded the Annual Allowance tax limits and have elected for the Scheme to pay the tax charge or your pension benefits are subject to a Pension Sharing Order the reductions applied to your benefits have not been taken into account in the figures supplied in this illustration. The current value of these deductions are shown below and will need to be deducted from the figures. Scheme Pays Pension Deduction Pension Sharing Order Pension Deduction Double accrual guarantee Lump Sum Deduction In the 1987 scheme a member s pension scheme membership over 20 years is doubled e.g. the pension for a member with 30 years service in the 1987 scheme would be calculated at 40/60ths ( ). This is more commonly known as double accrual. In the 2015 scheme members who move from the 1987 scheme to the 2015 scheme receive a proportion of the double accrual they could have expected to receive had they remained in the 1987 scheme. Full continuous pensionable service (i.e. pre and post 2015 scheme membership) is taken into account to calculate the benefits to be awarded under the 1987 scheme. A member in the 1987 scheme who serves for 20 years or less will have an accrual rate of 60ths 30 years will, because of double accrual, have an average accrual rate of 45ths (40/60ths is the same as 30/45ths i.e. 30 x 60/40 = 45) between 20 and 30 years will have an average accrual rate between 45ths and 60ths. The formula to calculate the weighted accrual is: A x B/C = D A = Total calendar years service in 1987 and 2015 schemes. B = 60 (1987 scheme accrual rate) C = Total service including double accrual that would have been awarded had the member remained in the 1987 scheme D = Weighted accrual rate on which pension rights accrued under the 1987 scheme will be calculated

13 Example Member with 16 years in the 1987 scheme and 9 years in the 2015 scheme (full-time) A 25 (16 + 9) B 60 C 30 (25 + 5) D 25 x 60/30 = 50th 1987 scheme pension 16 x 1/50 x 30,000 = 9,600 The following table provides the weighted accrual that would be used when calculating your 1987 scheme benefits. If your total continuous pensionable service falls between two of the years shown, the fraction will be apportioned using the formula above. Total continuous pensionable service upon retirement in the 1987 and 2015 Scheme (years) or less Fraction that years of earned 1987 service is converted to 1/45th 1/45.789th 1/46.667th 1/47.647th 1/48.75th 1/50th 1/51.429th 1/53.077th 1/55th 1/57.273th 1/60th To determine your 1987 scheme pension, multiply the number of years pensionable service you have in the 1987 scheme by the fraction. This is then multiplied by your pensionable pay. For instance, if you have 16 years accrued service in the 1987 scheme and transfer into the 2015 scheme and continue to earn 9 years of pensionable service in the 2015 scheme, your total continuous service will be 25 years. Your 1987 scheme rights will be converted from 60ths to 50ths. Your 1987 scheme pension will therefore be 16 x 1/50 x pensionable pay. 11

14 To determine your 1987 scheme pension, multiply the number of years pensionable service you have in the 1987 scheme by the fraction. This is then multiplied by your pensionable pay. For instance, if you have 16 years accrued service in the 1987 scheme and transfer into the 2015 scheme and continue to earn 9 years of pensionable service in the 2015 scheme, your total continuous service will be 25 years. Your 1987 scheme rights will be converted from 60ths to 50ths. Your 1987 scheme pension will therefore be 16 x 1/50 x pensionable pay. How PPS 1987 pension is calculated Standard benefits are calculated as follows:- For the first 20 years of your membership:- Pension (A) = Membership (up to 20 years) x Pensionable Pay x 1/60 All service accrued after the first 20 years of membership:- Pension (B) = Membership (from 20 years) x Pensionable Pay x 2/60 Total Pension:- Pension A + B = Total pension payable If you were transferred into the Police Pension Scheme 2015 then you will have pension rights in both the 1987 and 2015 schemes. This means that you will have a two part pension. Part 1 The first part of your pension remains fully protected in the 1987 scheme and will be based on your final salary at the point that you actually retire. You will be able to retire and take this pension when you have either completed 30 years pensionable service, are aged 50 with 25 or more years pensionable service or at your voluntary retirement age. Your pensionable service in both the 1987 and 2015 schemes will be used in calculating your entitlement to benefits under the 1987 scheme. You will continue to have access to the same commutation rights for your 1987 scheme pension. Part 2 The second part of your pension is in the 2015 scheme. If you remain a current member this can be taken from age 55 with a reduction, at age 60 without any reduction, or after age 60 with a pension enhancement. If you leave service before being entitled to take your 2015 scheme pension it will come into payment in full at your state pension age, or from age 55 onwards with reductions. You may opt to give up part of your 2015 pension for a lump sum, currently at the rate of 12 lump sum for each 1 of pension commuted 12

15 For those members covered by tapered protection, unless you retire before transferring across to the 2015 scheme you will also have pension rights in both the 2006 and 2015 schemes as a two part pension as described above. How PPS 2006 pension is calculated Standard benefits are calculated as follows:- Annual Pension = Membership x 1/70 x Pensionable Pay Lump Sum = Annual Pension x 4 If you were transferred into the Police Pension Scheme 2015 you will have pension rights in both the 2006 and 2015 schemes. This means that you will have a two part pension. Part 1 The first part of your pension remains fully protected in the 2006 scheme and will be based on your final salary at the point that you actually retire. You will be able to retire and take this pension from age 55. You will also receive an automatic tax free lump sum which you can if you wish exchange for increased annual pension Part 2 The second part of your pension is in the 2015 scheme. If you remain a current member this can be taken from age 55 with a reduction, at age 60 without any reduction, or after age 60 with a pension enhancement. If you leave service before being entitled to take your 2015 scheme pension it will come into payment in full at your state pension age or from age 55 onwards with reductions. You may opt to give up part of your 2015 pension for a lump sum, currently at the rate of 12 lump sum for each 1 of pension commuted. For those members covered by tapered protection, unless you retire before transferring across to the 2015 scheme you will also have pension rights in both the 2006 and 2015 schemes as a two part pension as described above. How PPS 2015 pension is calculated Standard benefits are calculated as follows:- Annual Pension = CARE pensionable pay x 1/55.3th There is no cap on the amount of pension that can be earned in the 2015 scheme. Your 2015 scheme pension will be increased by a revaluation order each year on 1st April. The revaluation order for the Police Scheme is based on the Consumer Price Index (CPI) %. 13

16 Standard or commuted benefits (1987 / 2015 Schemes) You may choose, up to 4 months before your retirement, to elect to have payment of standard benefits OR to commute part of your pension to provide a lump sum. No action is required by you now with regard to commuting any pension; however it must be done before you retire. When you retire, you will be provided with a form by Kent Police, on which you may choose whether to have standard OR commuted benefits. For the 1987 or 2015 schemes the amount that can be commuted can be up to one quarter of your pension. For the 2015 schemes you would receive 12 as a lump sum for every 1 of pension that is commuted. For the 1987 scheme the lump sum is calculated using actuarially calculated age related factors. There are H M Revenue and Customs (HMRC) rules which restrict the amount of tax free cash that can be taken in this way. In the event of you electing to commute pension to a lump sum at retirement these limits will be applied. Your pension is subject to income tax in line with tax codes supplied by HMRC. Any lump sum payable from the Police Pension Scheme 1987 may be subject to tax. Exchange of your Lump Sum (2006 scheme only) You may choose, up to 4 months before your retirement, to elect to have payment of standard benefits OR to exchange any part of your lump sum, including all of it, to increase your annual pension. No action is required by you now with regard to exchanging your lump sum; however it must be done before you retire. When you retire, you will be provided with a form by Kent Police, on which you may choose whether to have standard benefits OR exchange any part of your lump sum. Your pension is subject to income tax in line with tax codes supplied by HMRC. It should be noted that any survivor pension will not be affected by any election to exchange lump sum for pension. You cannot exchange part of your 2006 pension for a larger Lump Sum. 14

17 PENSIONS TAXATION - ANNUAL ALLOWANCE What is the Annual Allowance? The Annual Allowance (AA) is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge. The AA was reduced to 40,000 from 6 April Further changes to the AA were made for high earners from 6 April Does the AA affect everyone? It usually only affects scheme members who are high earners, those who have a significant increase in their pay, those that combine sizeable periods of membership, those that transfer pension rights from other schemes (in certain circumstances) and those that pay large amounts of additional contributions. It also has an effect on members of the 1987 scheme after 20 years of membership when you attain double accrual for each year that you work. The increase in every member s pension benefits have to be assessed but the majority will not reach the AA limit. If we think that the increase in your Police pension benefits has exceeded the limit for 2017/18 then we will write to you by 6 October. What if I have contributed to other pension arrangements during the year that mean I may have exceeded the AA? We will only automatically write to you if you exceed the 40,000 limit based on the benefits that we administer. If you think you need this information you will need to contact us, using the contact details on the inside cover. You will need to obtain similar information from your other pension provider. Tapered Annual Allowance for high earners From 2016/17 the AA is tapered for members who have a Threshold Income in excess of 110,000, and Adjusted Income in excess of 150,000. Threshold Income is broadly your taxable income after the deduction of your pension contributions. Adjusted Income is broadly your threshold income plus pension savings built up over the tax year. This means that you may exceed the 150,000 threshold even if your salary is below this level. 15

18 From 6 April 2016, the taper reduces the AA by 1 for 2 of adjusted income received over 150,000 until a minimum AA of 10,000 is reached. It is for individuals to calculate whether the taper impacts on them and contact us for their Pension Input Amount as this will not automatically be provided. More information regarding Annual Allowance, including tapered annual allowance, some of the terms above and examples of calculations, can be found on our website or at PENSIONS TAXATION - LIFETIME ALLOWANCE What is the Lifetime Allowance? The Lifetime Allowance (LTA) is the maximum amount of pension savings that you can make tax-free over your lifetime. The LTA reduced to 1 million from 6 April 2016, increasing to 1,030,000 for 2018/19. To calculate your LTA you need to multiply your annual pension by 20, divide this by the lifetime allowance and multiply by 100. Example Lifetime allowance 2017/18 = 1 million Annual pension 35,000 x 20 = 700,000 1,000,000 x 100 = 70% of lifetime allowance used. Fixed and Individual Protection 2016 Due to the change to the LTA from 6 April 2016 two new protections were introduced know as Fixed Protection 2016 and Individual Protection HMRC have introduced an online self-service for pension scheme members to apply for these protections. There is no application deadline for these protections, however, you must apply before you take your retirement benefits. Before applying for either of these protections we strongly recommend that you find out more information about them either by visiting or by seeking independent financial advice. General Data Protection Regulations Kent Police provide the Kent County Council Pension Section with personal data about members of the scheme which they use to administer the Police Pension Schemes. The Pension Section holds, processes and shares this data with third parties. Full details of this can be found in the Kent Police privacy notice which can be viewed at 16

19 Contact Us For queries regarding your Annual Benefit Illustration:- H (Benefit Illustration Helpline Monday to Friday 10:00 to 16:00) C ABI enquiry form b The Pensions Section, Invicta House, County Square, Maidstone, Kent ME14 1XX For information regarding your State Pension:- C The website has information that you may find useful as a current member of the Police Pension Scheme. You will find information about the scheme, publications including the scheme guide and other leaflets and forms. 17

20