The pension rights of police officers who suffer losses as a result of being transferred from the 1987 or 2006 scheme to 2015 police pension schemes.

The purpose of this article is to seek to describe the legal rights of police officers who were required to transfer from the 1987 Police Pension Scheme under the Police Pensions Regulations 1987 to markedly less generous 2015 Police Pension Scheme under the Police Pensions Regulations 2015, and now find that their pension rights are worth less than they would have been if the officers had stayed in the 1987 scheme. In particular, this article looks at officers who are now in receipt of pension payments from the scheme, such as officers who have been ill-health retired.

Successive governments have used the powers in PPA 1976 to make pension scheme regulations for police officers. In broad terms, as life expectancy for retired police officers has risen and hence the costs of paying pensions to retired police officers has escalated, so the contributions required by both police officers and Forces have increased and the value of the package of benefits delivered by a police pension has decreased. Nonetheless, the value of a police pension remains a very significant part of the remuneration packages offered to police officers. 

There are 3 current police pension schemes:

a) The scheme brought in by the Police Pension Regulations 1987 (“the 1987 Regulations”) which is referred to here as the “1987 Scheme”;

 b) The scheme brought in by the Police Pension Regulations 2006 (“the 2006 Regulations”) which is referred here as the “2006 Scheme” also known as the New Police Pension Scheme or the “NPPS”; and

 c) The scheme brought in by the Police Pension Regulations 2015 (“the 2015 Regulations”) which is referred to here as the “2015 Scheme”.

Each scheme constitutes a self-contained statutory framework which defines the rights of members and the circumstances in which those rights can be reduced or forfeited. Unless there is a specific statutory provision permitting this, the rights of pension scheme members do not read across from one scheme to another. Hence, by way of example, a Force acted unlawfully when it attempted to use provisions in the 2006 Scheme to deny an officer an ill-health pension under the 1987 scheme on the grounds that the officer was facing disciplinary proceedings. Provisions in the 2006 scheme do not “read across” to rights of officers or former officers under the 1987 scheme.

The 1987 Scheme closed to new entrants in April 2006 but existing members of the 1987 Scheme stayed as members of the Scheme and continued to accrue future pension rights for themselves under the 1987 Scheme. Thus all police officers who joined the 1987 scheme and commenced their service prior to 6 April 2006 remain entitled to pension rights defined by the 1987 scheme (unless they were automatically transferred to the 2015 Scheme as set out below). Further, if an officer has been prejudiced by an automatic transfer to the 2015 scheme and suffers actual loss, that officer may have a right claim damages against the Secretary of State (and possibly the Chief Constable) for any loss on the basis that the forced transfer amounted to age discrimination against the officer.

Police officers who joined the police services after April 2006 but before the 2015 scheme commenced in April 2015 could not join the 1987 scheme but had the opportunity to become members of the 2006 Scheme. Officers were, in theory, entitled to transfer from the 1987 scheme to the 2006 scheme but, in practice, few did so because the benefits under the 2006 scheme were less extensive than the benefits under the 1987 scheme. Thus serving officers who commenced their period of service prior to April 2015[1] will have started as either members of the 1987 scheme or the 2006 scheme[2].

When police pension arrangements changed in 2015, a different approach was taken by the government to transitional arrangements. Police officers starting on or after 1st April 2015 can only join the 2015 Scheme. However, in order to bring forward the financial savings anticipated by the changes to the 2015 scheme, all existing members of the 1987 scheme or 2006 scheme did not retain the right to acquire future benefits under their existing scheme. Members of the 1987 scheme or 2006 scheme were divided into (a) “Protected Members”, who continued to be able to accrue future rights under the 1987 schemes or 2015 schemes, (b) “Tapered Members”, who were only able to continue to acquire rights under their existing schemes for a defined period and (c) “Unprotected Members”, who were unable to acquire any future rights under the 1987 or 2006 schemes. Hence unprotected members of the 1987 or 2006 schemes automatically became members of the 2015 scheme and could only acquire new pension rights after April 2015 under the 2015 scheme. This means that, for example, their right to an ordinary or deferred pension for the years when they were in the 20015 scheme was not based on their final salary but on a Career Average Revalued Earnings Scheme (“CARE”)[3].

 Unprotected members of the 1987 and 2006 Final Salary Schemes[4] moved into the 2015 Scheme on 1 April 2015. Protected members of the 1987 and 2006 schemes, depending on the level of protection, either stayed in their existing scheme or moved into the 2015 Scheme when their period of protection ceases. However, allowing some members of the 1987 or 2006 Schemes to remain within their existing Schemes and thus allowing them to continue to accrue benefits under the 1987 or 2006 Scheme, but requiring other former members of the 1987 or 2006 Schemes to move to the 2015 Scheme so that future benefits for those officers could only be accrued under the 2015 Scheme was disadvantageous to younger police officers who were forced to transfer to the 2015 scheme in comparison to older officers who continued to acquire new rights under the earlier schemes. It would have been lawful to allow all members of the 1987 and 2006 schemes to have stayed in their existing schemes for the remainder of their careers. It may also have been lawful to wind up the 1987 schemes or 2006 schemes, by putting an end date on the ability of officers to acquire new rights under the 1987 schemes or 2006 schemes. Nonetheless, the 2015 scheme was introduced primarily to make savings to the government on the future costs of police pensions. Allowing officers to remain in their existing schemes would have substantially deferred the time when police forces would have made savings from introducing the new rules. 

 Similar arrangements in respect of existing public sector pension scheme members were imposed as a result of changes to other public sector pension schemes, including those relating to Judges and firefighters. The lawfulness of these types of arrangement were challenged in McCloud and others v Ministry of Justice. On 20 December 2018 the Court of Appeal ruled[5] that the provisions in the judicial and fire-fighters’ pension schemes were unlawful because they constituted unlawful age discrimination. The key finding in that case was that there was no rational explanation put forward by the government to justify consciously treating a group of those who were closest to retirement, and who were the least adversely affected, more favourably than those who were further from retirement and thus were more affected by the changes. Thus[6], as there was no basis for the justification in difference in treatment, the policy could not be justified and was unlawful age discrimination.

 The same arguments about age discrimination apply to police officers who were required to join the 2015 scheme instead of remaining as members of the 1987 or 2006 schemes. The government did not want to encourage multiple litigation across all affected pension schemes and thus assurances were given that any reforms would apply to all relevant public sector pension schemes. However the government has delayed in saying how it is going to make changes to remove the unlawful effects.

 On 25th March 2020 the Economic Secretary to the Treasury, John Glen, finally made a Written Ministerial Statement which included the following text:

 "On 15 July 2019, the government announced it would take steps to remove this discrimination retrospectively (HCWS1725). It confirmed that this would apply to pension scheme members with relevant service across all those public service pension schemes that were introduced in 2014 and 2015, regardless of whether individuals had made a claim. This is a complex undertaking, and it is important to get it right.

Since February 2020 relevant pension schemes have been conducting technical discussions with member and employer representatives to seek initial views on the government’s high-level proposals for removing the discrimination.

I am grateful for the constructive engagement of trade unions, staff associations, public service employers and other stakeholders in these discussions. The government is considering the initial views of stakeholders and continuing to work through the details of the technical design elements of the proposals. Detailed proposals will be published later in the year and will be subject to public consultation. The government will welcome views on these proposals.

For the avoidance of doubt, members of public service pension schemes with relevant service will not need to make a claim in order for the eventual changes to apply to them.

I would like to reassure members that their pension entitlements are safe. The proposals the government is considering would allow relevant members to make a choice as to whether they accrued service in the legacy or reformed schemes for periods of relevant service, depending on what is better for them. The government will provide more detail later in the year, but if an individual’s pension circumstances change as a result, the government may also need to consider whether previous tax years back to 2015-16 should be re-opened in relation to their pension.

The government will also set out its proposal to remove the discrimination for future service in the forthcoming consultation”

This was thus an interim statement which gave more details as to how the government would change the rules but did not publish the precise rules. 

The 2015 Police Scheme for police officers is a “public sector scheme” which comes within the terms of this written ministerial statement. This statement (and the July 2019 statement preceding it) appears to be a commitment to allow 1987 and 2006 unprotected members the right to make a choice as to whether they wish to continue to accrue rights under the 1987 or 2006 Schemes or to accrue rights under the 2015 schemes. Thus, subject to seeing the detail in the consultation documents to be published later this year, the government appears to be proposing to restore the pension rights of retired police officers who had their pension existing or future rights reduced by reason of being forced to transfer from the 1087 or 2006 Schemes to the 2015 Scheme. It will not be possible to express any view on whether younger police officers were forced to change from the 1987 or 2006 schemes to the 2015 Scheme will be properly compensated for having to do so until the full amending Regulations are published. 

Police officers who are not seeking to claim pension benefit until the new Regulations are published can probably afford to sit tight and wait until the new rules come into force.

The situation will be different for officers who have been required to retire since 2015, notably on the grounds of ill-health (now unfitness), and are currently in receipt of, for example, a lower-tier injury pension under the 2015 Regulations which pays much less than the "B3" ill-health pension they would have received under the 1987 Regulations if they had not been forced to transfer to the 2015 scheme. The 1987 scheme did not have multiple layers of ill health pension and hence, in effect, those officers are being underpaid as a result of being forced to transfer to the 2015 scheme. Now those transfers have been declared unlawful, the continuing underpayment of these former officers may well give rise to a current legal right to be paid the rate payabel under the 1987 scheme.

Any former officers who find that payment to them has been reduced or their rights have been diminished as a result of being forced to transfer from the 1987 or 2006 schemes to the 2015 should seek legal advice as quickly as possible.

[1] Other than those small minority of officers who opted out of the pension scheme altogether. 

[2] There are exceptions such as officers who have periods of service before and after 2006, who will have accrued rights under both schemes and thus, in effect, be paid 2 separate pensions.

[3] Although their rights under the 1987 or 2006 scheme were based on a “final salary” calculated in accordance with the relevant transition provisions.

[4] And tapered members after the expiry of the taper period.

[5] See https://www.bailii.org/ew/cases/EWCA/Civ/2018/2844.html#Order Permission to appeal this decision to the Supreme Court was refused and thus this is a final determination of the issues.

[6] This is a one line summary which does not do justice to a complex set of legal arguments. 

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