Public Service Pensions Bill

Memorandum submitted by James Lee (PSP 26)

Area of special interest – police pension reform

My background – I am a police constable serving with West Yorkshire Police, with 8 years of service. My wife is also a police constable with a similar length of service.

Summary – The Public Service Pensions Bill impacts unfairly and excessively on police officers. The scale of the changes is unprecedented and does not reflect the cost saving measures that other public sectors are being asked to accommodate. The Bill’s protection for those within 10 years of retirement at 1st April 2012 amounts to age discrimination.

1. Police officers are being asked to accept an increase in retirement age of between 5 and 12 years. If these figures were applied to the State Pension Age there would be uproar – imagine if all Public Sector workers were told they could not retire until age 77. Police officers are pragmatic people, and accept the need for increased pension ages life expectancy increases, but the scale of the change in relation to police officers is excessive and unfair. It is too much to be accommodated into one’s plans for later life, and simply throws them into turmoil.

2. The commutation factor proposed in the new Bill is punitive towards police officers. I stand to be £65,000 worse off at retirement due to this factor alone. My wife being a police officer also, as a couple we will be £130,000 worse off. Again, people’s plans for later life (mortgages, children’s education etc.) are based on their pension, and again no-one expects to keep the current levels of remuneration. But these quantities of money are life changing and unfair.

3. The above figure accounts for only the change in commutation. When factoring in extra payments into the mortgage, and 5 years of payments that will not be received due to retiring later, I will be £177,000 worse off at retirement. Doubling that to account for my wife, and we as a couple will be £354,000 worse off than we would have been under the status quo, and receive £9,800 less per annum. How can this be right?

4. My circumstances do not even reflect a worse-case scenario. There are those unfortunate enough at certain lengths of service (as PC’s, not higher ranks) as this goes through, to stand to be £250,000 worse off at retirement. Quarter of a million pounds! This is silly money to a police constable and if any Public Sector employee, including the Public Bill Committee, does not agree then their salaries should be carefully inspected because they are being paid too much.

5. If the Government deems these changes to Public Service Pensions right and necessary then new recruits should be allowed to make their own minds up whether to embark on this career. Police officers ask that the transition is made fair to avoid these catastrophic impacts on our personal finances. We should not be penalised for planning for our future and choosing a career which helps make it secure. This is what the Government actively encourages and it is two-faced to take this position.

6. The current transition arrangements to "smooth" the impact of these proposals are woefully inadequate for the reasons shown above – they do not smooth the transition for me, and only protect the select few with the necessary service length. The ten year protection bracket is arbitrary and discriminatory, as will be discussed in the next paragraph. The four years of "smoothing" period for those with service length 16-19 years is again arbitrary and also unfair. It will still allow for the situation where someone can have one day short of 20 years of service and find the impact on them wholly different from a person who joined the day before, and possibly retire as much as 12 years later. This does not appear very "smooth". The suggestion that provision has been kept to retire early on an actuarially reduced pension is dishonest, as the sums proposed are so punitive as to effectively prevent anyone choosing this option.

7. The proposals are discriminatory on the basis of age as two officers with the same lengths of service but at different ages are treated differently. This exact situation has actually arisen with a team-mate of mine and his wife. Consider the following example:

Two recruits join together. A is aged 19 years, B is aged 30 years. At the cut-off date 1st April 2012 both have 16 years of service. Hence A is 35 years old and B is 46 years old. A was due to retire aged 49 in 2026. B was due to retire aged 55 in 2021 (as B is unable to complete the standard 30 years’ service due to age). This means B is 9 years from retirement so falls within the 10 year protection bracket, and will retire on their 1987 pension as planned. A is 14 years from retirement and offered only minimal "transitional smoothing". A will, under the 2015 proposal, now have to retire 11 years later than planned, in 2037 and at massive financial detriment which as shown earlier could amount to £250,000.

In short, the proposals discriminate against A due to their age.

Conclusion - It has been said publicly that police officers are not a special case and should be treated the same as whole public sector. The fact is that police officers have historically been treated as a special case, regardless of the arguments for and against that situation. As such, to simply yank police officers into line with the entire public sector in one fell swoop unfairly and severely impacts upon them. The transitional arrangements for this pension reform must account for the current schemes which most police officers are members of, and make changes which can be reasonably accommodated within the lives of those officers.

November 2012

Prepared 23rd November 2012