Police Pension Scheme New Police Pension Scheme Options exercise
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Police Pension Scheme 1987 New Police Pension Scheme 2006 Options exercise: guidance for pensions administrators Supplement no. 1 1. Introduction 1.1 These notes supplement the Home Office guidance of 7 September 2006 (issued by e-mail on 8 September) on the police pensions options exercise. 1.2 Since the main guidance was issued, a number of additional points on the options exercise have been raised or come to light. These points, on which additional advice is set out below, relate to: • Personal benefit statements and covering letters for officers who are currently opted out of PPS (whether or not they have since joined NPPS) • Personal benefit statements and covering letters for female officers uprating pre-1990 service • Names and addresses on covering letters. 1.3 Any enquiries about the guidance or the conduct of the options exercise may be addressed to the following contacts in the Police Pensions Section at the Home Office: Adrian Brook 020 7035 1883 firstname.lastname@example.org Sara Alderman 020 7035 1882 sara.alderman@homeoffice,gsi.gov.uk Anne Jones 020 7035 1883 (020 7035 1893 from 16 October) email@example.com 1.4 Further supplements may be issued as necessary. 2. Officers who have opted out 2.1 The conduct of the options exercise for officers who have opted out of PPS (and not opted back in by 5 April) was covered at paragraphs 3.12, 3.16 - 3.17 and 3.19 of the main guidance. The text of a covering letter for such officers was given at Annex H and a choice from was provided at Annex L. 2.2 As explained in paragraph 2.10 of the main guidance, the regulations provide that officers who opted out of PPS with entitlement to an ordinary or deferred PPS pension not in payment, and who cancel their election to opt out of PPS before the end of the options exercise, can make a transfer election to join NPPS and for the service they have built up in PPS to be transferred on the options exercise terms. Such officers must accordingly be included in the options exercise. This includes both: • those who have re-joined the service or cancelled an election since 5 April 2006 and are now members of NPPS; and • those who are not contributing to either PPS or NPPS but who can still opt to cancel their election (and join NPPS) before the end of the options exercise. 2.3 It is now clear that some elements of the original covering letter at Annex H are unsuitable – in particular the reference to a benefit statement. We understand that the pensions software systems currently in use will not identify officers who have opted out of PPS and will not produce a benefit statement for them, regardless of whether or not they may already have joined NPPS. A revised covering letter for officers with PPS service but who are not paying pension contributions to PPS is attached. This should be substituted for the original version of Annex H. It should be possible to identify such officers, if not through the pensions software then through payroll information. 2.4 The revised version of the letter makes no reference to a personal benefit statement, which will not be provided as a matter of course for officers who have opted out of PPS. Instead, it invites such officers to ask for further information on the level of benefits they could obtain in NPPS by converting their PPS benefits across. Such information would have to be provided on an individual basis. The number of such requests, given the relatively few officers who have opted out of PPS, is likely to be small. Officers who opted out of PPS with preserved entitlements to PPS benefits should still receive the two booklets and the appropriate choice form. 2.5 Note that this applies only to those officers who have opted out while retaining deferred PPS benefits. As explained in paragraph 3.19 of the main guidance, officers who opted out of PPS with a refund of contributions, or without ever having made any contributions, are not eligible to make a transfer election as part of the options exercise and should not receive an options pack. 2.6 The choice form for officers who have opted out, at Annex L of the main guidance, is unchanged. 3. Female officers uprating pre-1990 service 3.1 We understand that the pensions software systems provided by Heywood and Paymaster, and used by the majority of forces, will not take account of pre- 1990 service uprated by female officers, even if payment is complete. 3.2 The notes to the personal benefit statement make the point that officers may need to ask for additional information to get an accurate comparison between PPS and NPPS, although they do not refer specifically to uprating pre-1990 service. 3.3. We recommend that you should identify any officers in this position and insert the following additional sentence at the end of the fifth paragraph of the covering letter at Annex G of the main guidance, after the words “for instance if you have incorrectly been excluded from ill-health benefits (or the other way round)”: If you are a female officer and you have uprated service pre-1990 (or if you are in the process of doing so), for the purposes of a spouse’s or civil partner’s pension, you should note that your statement will not take this into account. Please contact us if you would like more information on how the uprating would affect the figures in your statement. 3.4 If an officer asks for more information then, if you use Heywood or Paymaster systems, you will need to carry out a manual calculation to provide a comparative statement taking the uprated service into account. Where an officer has not yet finished paying for the uprating, we recommend that the comparative information provided should be as if payment had been completed. If so, you should stress the point made in the explanatory notes to the statement that the figures are provided only for the purpose of comparison between the two schemes and do not guarantee any entitlement to the benefits described. 4. Names and addresses on covering letters 4.1 The main guidance left open the question of whether the covering letters to options packs should be individually addressed. It has been pointed out that the Pensions Ombudsman would not regard an unaddressed communication as sufficient for the purposes of informing someone of their pension benefits. This would seem to be the case even if the communication includes material which is specific to the person concerned such as, in our case, the personal benefit statement. 4.2 The covering letters to the options packs must therefore include the officer’s name and address (home or workplace, as the case may be). Home Office 19 September 2006 Annex H Options pack covering letter for officers not paying PPS contributions [REVISED] Police Pension Scheme 1987 or New Police Pension Scheme 2006: your choice As you may know, the New Police Pension Scheme 2006 (NPPS) came into effect on 6 April this year. This letter invites you to decide whether you wish to join the new scheme (if you are not already a member) and whether you wish to convert your benefits in the 1987 scheme to the new scheme. The accompanying pack provides information to help you make your choice. All new entrants to the police service from 6 April join NPPS. Members of the old scheme, the Police Pension Scheme 1987 (PPS) now have the opportunity to transfer to the new scheme if they wish. This exercise also provides an opportunity for officers who opted out of PPS, but who have retained PPS pension rights which have not yet come into payment, to join NPPS and transfer their PPS service into NPPS and consolidate their pension rights in the new scheme on the special terms which apply for the options exercise. You cannot now re-join PPS. Officers who have already joined NPPS (either upon re-entering the service or opting back into paying pension contributions since 6 April this year) can also use this opportunity to consolidate their pension rights if they have PPS service. If you decide to join NPPS, or if you have already joined, you can retain your PPS pension rights separately if you do not wish to consolidate them in NPPS. You only have until 31 January 2007 to transfer your PPS service into NPPS on the special terms. If you have not joined NPPS already you will also need to apply to join at the same time as making your election to transfer your PPS service. Enclosed with this letter are the following: • The two booklets Understanding your choice and Making your choice • Choice form • [Reply paid envelope] Please check that you have received them all. If not, contact us at the above address. The information should help you make up your mind whether to join NPPS if you have not done so already and, if you have joined or applied to join, whether to move your PPS benefits across. This is an important decision and we cannot make it for you. If you require more information about PPS or NPPS, you can refer to the full Members’ Guides for each scheme which are available on the force Intranet or in hard copy on request. Please contact us if you would like specific information about the benefits that would be available to you in NPPS if you were transfer your preserved PPS benefits across. We will be happy to provide any information we can, but we cannot advise you which scheme is better for you and you may wish to obtain independent financial advice. Once you are satisfied that you have the necessary information to make an informed choice, you should spend some time thinking about what you expect your pension scheme to provide for yourself and your dependants. All you need do then is fill in the enclosed choice form (keeping a copy for your own records) and return it in the envelope provided. The form asks you to decide both whether to join NPPS (if you are not already a member) and, if so, whether you wish to move your PPS benefits across or leave them where they are. You must return the choice form by 31 January 2007 at the latest. But you do not have to wait until that date - if you can make your decision earlier, please do so. If you do not return the form by 31 January you will not subsequently be able to transfer your PPS service to NPPS under the special terms.