Pensions and Co-habiting Couples
A recent Court case judgement has generated several enquiries from our Members.
We have yet to see the full judgement.
However, from the information in the media, it appears to us that this decision was based on the specific point of unmarried couples being mandatorily required to complete a nomination form. In this case, the nomination form had not been completed and the pension authority determined that no benefits were available to the claimant.
The claimant challenged that decision and the Court ruled that the claimant had been treated differently, because there is no requirement for married couples/civil partners to complete a nomination form.
Since 2006, the Police Pension Scheme has provided benefits for adult survivors including spouses, civil partners and unmarried partners who are not civil partners.
All adult survivor awards are payable for life, irrespective of whether the survivor remarries or forms a new partnership.
In the case of unmarried couples, there is a requirement for the pension scheme member to complete a nomination form.
In our view, the probable impact of this recent judgement will be that unmarried couples will no longer have to complete the nomination form, but will still have to prove they had been living together for 2 years.
Prior to 2006, The 1987 Police Pension Scheme provided entitlements payable to adult survivors i.e. widows, widowers and civil partners but not cohabitees who were not married or in a civil partnership.
Furthermore, there is no indication that this recent judgement will be retrospective beyond 2006.
However, we await the full judgement and will consider its findings.
The ONS have now released the Consumer Price Index for September 2016 which shows an increase of 1% . As a result, Police Pensions will increase by 1% as of 1st April 2017.
Full details can be found on the ONS website at: ONS
POLICE PENSION OVERPAYMENTS
It has come to our notice that throughout England and Wales as Forces outsource their Pension Administrators to external or other providers, a large number of anomalies are arising; which have resulted in them identifying that a number of Pensions have been paid incorrectly, for a variety of reasons.
This has led to the Pensioners having been underpaid or overpaid for a number of years. In the event that you have been underpaid, the monies owed should be paid to you as soon as possible; if the Administrator is indicating that you have been overpaid it is important that you DO NOT agree to repay any monies; at least until you have established the exact reason for the overpayment.
Most of these overpayments will have been made as a result of 'mistakes' or 'errors' made by the Pension Administrator and in view of that you should follow the course of action as outlined in the below documents.
At State Pension age, although the Police Scheme remains responsible for updating the bulk of your police pension, in line with the relevant index, the State becomes liable to index link the much smaller Guaranteed Minimum Pension element of your police pension. For a full explanation use the link below:
This is not the case however for those permanently resident abroad in a country where the state pension is frozen, which includes; Australia, Canada, New Zealand and South Africa.
In these cases the Police Pension Scheme, by a Treasury Direction (currently dated 6 July 2000) does not reduce their inflation-proofing and the full increase is applied.
See Home Office Library document below from page 21 onwards.
Public service pensions The arrangements in place before 6 April 2016 ensured that public servants received indexation on their GMP, while preventing double increases. (HM Treasury guidance, May 2001). Because the mechanism in the old State Pension for providing full indexation of GMPs, is not part of the new State Pension, the Government had to consider how to deliver on commitments by previous governments that public service pensions would be fully indexed. In March 2016, it announced that those reaching State Pension age between 6 April 2016 and 6 December 2018 would receive a fully-indexed public service pension for life. (HM Treasury press release, 1 March 2016). In November 2016, it launched a consultation on how to address the issue in the longer term. It aimed to consider two issues:
• How best to avoid the introduction of unequal payments to men and women in the public service schemes that will result from the abolition of AP. There are legal requirements to pay men and women equal pensions in respect of pensionable service after 16 May 1990, and the old arrangements were designed to deliver equalisation by way of increases to AP
• Whether, following the introduction of the new State Pension, the public service pension schemes should pay full indexation on GMP earned while a member of a public service pension scheme, for someone who reaches SPa after 5 December 2018.
The deadline for responses is 20 February 2017
We are often asked why the Police Pension reduces when a member starts receiving their State Pension.
Please use the link below to view the explanation.
PUBLIC SECTOR PENSIONS OVERPAYMENT
Recent questions in the House of Commons and attendant publicity has highlighted an issue of overpayment of pensions to retired public sector employees including those in the police scheme.
This is a complicated issue.
In essence, the problem has to do with the Guaranteed Minimum Pension, its calculation, index linking and impact on the individual's Police Pension index linking.
Guaranteed Minimum Pensions were provided by public service pension schemes between 1978 and 1997. The problem will not affect any pensioner unless he or she is over State Pension age with service in this period and for whom the force have no record of a GMP.
It is estimated that between 1220 and 1830 (1% - 1.5%) police pensioners in England and Wales may be affected by this miscalculation. No overpayments are to be recovered but an adjustment will be made to the pensions of those affected in April 2009.
For those who require more details of the problem and its likely impact we have added a link to the relevant Home Office advice to forces: Home Office Circular 31/2008
To view the National Audit Office Report on errors in the Guaranteed Minimum Pension please use this link NAO report
Police Pensions are currently Index Linked from age 55yrs and are increased in line with the Retail Price Index.
Pensions are uprated each April and the level of increase is determined by RPI in September of the preceding year.
The index used to uprate Pensions changed to the CPI in 2010 implemented April 2011.
For details of the increases applied see below:
HOW INDEX LINKING WORKS
The question of taxation of pension benefits in some circumstances following re-employment is proving a difficult subject to resolve.
NARPO have been working hard to provide answers and an acceptable solution to this problem since we became aware of it late last year. Whilst we agree that tax is a personal matter we have been the only representative organisation which has endeavoured to provide information and advice on this worrying topic. We will continue to seek a solution and provide that advice.
We also understand that ACPO and the Police Federation, whilst not in a position to provide individual advice, have also made representations along the same lines as NARPO to the Home Office seeking a fair solution to this problem.
One difficulty with this issue and the current position is, as we understand it, that several forces are independently making representations to HMRC to seek a solution. HMRC can from our own experience be cautious in their approach to matters such as this and this can prolong the process of negotiations. ACPO as a body is not involved in those negotiations, which are being conducted on a force by force basis, but, as well as making representations to the Home Office on this matter, ACPO has made similar representations to HMRC. It is our understanding that whatever results from the individual force dealings with HMRC, the Revenue will be seeking a single solution for all forces. This may take some time possibly up to two months to get a definitive answer from HMRC.
Whilst it may be difficult advice to accept, those affected might consider waiting for the outcome of those discussions before taking any further action.
If however you have been told by your force that you have a tax liability, one course of action would be to write to the force, expressing surprise at the position you find yourself in and seeking a written response from the force as to the actual tax payable and the specific reason for that tax demand. Once the force has responded, we still believe it appropriate to make a complaint of maladministration of the pension scheme, initially through the force pension Internal Dispute Resolution Procedure and eventually to the Pension Ombudsman.
This is a very complex area substantially influenced by individual circumstances. NARPO are not tax experts and those affected should actively consider obtaining independent tax advice.
Whilst we are unable to provide any tax advice to individuals, the below links to the technical pages of the HMRC website do contain further useful explanations of the current situation:
Please find several useful documents in relation to Pension Sharing below. This is a complex area and it is advisable to seek expert advice from one of our police divorce solicitors whose details are available on the Member Services page of our website.
The Court of Appeal has now handed down its decision in relation to the Governments switch to the CPI as the index used to uprate pensions.
As you will see the appeal was dismissed.