Police Pensions: Affordability of current schemes is the title of a report from a think-tank, Policy Exchange. It says that the cost of police pensions has risen significantly over the past 15 years – from less than £1billion a year in 1995/6 to almost £2.5billion a year in 2009/10, or a 79 per cent increase in real terms. Taxpayers have picked up an increasing proportion of the bill, such that police officer pensions now account for £1 in every £7 spent on policing in England and Wales.
According to the report, this increased cost is due to rising life expectancy and in recent years, fewer active members. New data reveals that two police authorities are supporting the costs of more retired police officers than active and deferred members combined.
As the Home Office prepares to make changes to police officer pensions, this report supports recommendations made by Lord Hutton including moving towards a pension scheme based on career average pay and an increase in the Normal Pension Age to 60 years. It further argues that the Coalition Government should develop a New Model Police Pension scheme that is more affordable for officers and taxpayers alike. You can download the report at the Policy Exchange website. To avert a future funding crisis, the report recommends:
– In the short term, there must be a move away from a final salary to a career-average scheme and a raising of the standard retirement age to 60 as Hutton recommends. Personal contribution rates may also need to rise (especially for the most senior ranks) but need to be affordable for officers.
– In the longer term, the government should design a New Model Police Pension scheme. This scheme, phased in over time, would remain more generous than the public sector average, but would be less expensive and incorporate greater choice for officers. In line with moves towards a more modern and professional service, this new scheme should be open to civilian staff for the first time to help create a more united and flexible police workforce.
What they say
Edward Boyd, author of the report, said: “Police officers’ pensions have become increasingly unaffordable for taxpayers. A growing pensioner population, primarily down to increased life expectancy coupled with only minimal changes in the retirement age, has increased costs substantially over the last decade. The more we have to pay for pensions, the less police forces have available to spend on hiring officers to fight crime. We desperately need a new police pension scheme fit for the modern world. Without reducing costs, police officer pensions will become unaffordable for taxpayers and for officers themselves.”
