If your pension savings are worth more than £1 million you may need to protect your pension savings from the lifetime allowance tax charge.
What is the lifetime allowance?
The lifetime allowance is the amount of savings you can take from your pension schemes without facing a tax charge.
The lifetime allowance is currently £1.25 million but is reducing to £1 million from 6 April 2016.
From 6 April 2016 if you take more than £1 million from your combined pension savings, you may face a tax charge.
How much is the lifetime allowance tax charge?
The lifetime allowance tax charge is
Do you know the value of your combined pension funds?
The lifetime allowance applies to the value of your combined UK registered pension schemes and some overseas schemes. Your pension scheme administrator(s) may already send you information that will help you to find out the value of your combined pension savings. If not you should contact your pension scheme administrator(s) for more information.
This information will help you if you need to apply to protect your pension savings from the lifetime allowance tax charge.
Do I need to do anything now?
If you are agreeing salary and pension contribution levels with your employer for next year, increases in contributions to your pension schemes based on higher earnings may mean you exceed the lifetime allowance.
You may need to act to protect yourself from a tax charge even if you are not yet nearing retirement.
If you have existing protection but know that you may lose this you may also need to consider whether to apply for the new protections.
What do I need to do to protect my pension savings?
From April 2016 you will be able to apply to HMRC for one of two new protections when the lifetime allowance is reduced. These will be known as fixed protection 2016 and individual protection 2016.
You will be able to apply for these new protections by using a new on-line self-service system which will be available from July 2016. The new self-service system is still being developed and we will provide you with more information on this in due course.
You can find more information about the reduction of the lifetime allowance in Pension Schemes Newsletters 72 and 73.
Your pension savings may already be protected
The lifetime allowance was introduced in 2006 and was reduced in 2012 and again in 2014.
Each time the lifetime allowance reduced, people who had already planned their pension savings on the basis of the higher lifetime allowance could protect their pension savings by applying to HMRC and should have received a certificate to confirm their protection.
However you may still be subject to the lifetime allowance charge if you lose this protection.
You can still apply for protection from the 2014 reduction in lifetime allowance until 5 April 2017. You can find more information about how to do this along with other information about the existing protections and when these may be lost at Tax on your private pension contributions – GOV.UK .Posted in Police | Comments Off on Changes to Lifetime Allowance and Protections April 2016
Cessation of “contracting out” of the Additional State Pension
You may be aware that from 6 April 2016 a new ‘single-tier’ State pension will be introduced. This will replace the existing Basic State Pension and Additional State Pension.
What does this mean for members of the Police Pension Schemes?
Under the existing arrangements, members of the police pension schemes are contracted-out of the Additional State Pension and in return pay lower National Insurance contributions. The changes mean that from 6 April 2016, the police pension schemes will no longer be contracted-out of the Additional State Pension.
These changes will not affect your accrued benefits in the police pension schemes, or the benefits you build up in the future.
What does this mean for my state pension?
Further information about the new State Pension, including changes to National Insurance arrangements for members of public sector schemes like the police pension schemes, can be found at the links below.Police | Comments Off on State Pension Reforms 2016 / Removal of National Insurance contracting -out
We are now in a position to be able to issue projections to Police Officers that have either transferred into the 2015 scheme from the 2006 scheme, or will do at a future date. We are planning on issuing these over the next week.
We are now in a position to be able to issue projections to Police Officers that have either transferred into the 2015 scheme from the 1987 scheme, or will do at a future date. We are planning on issuing these over the next week.
NB: Those Officers that have either transferred into the 2015 from the 2006 scheme, (as opposed to the 1987 scheme), or will do at a future date, will not get a statement at the moment as we are awaiting further guidance from the Home Office. As soon as this information has been received we will issue statements for these officers too.Posted in Police | Comments Off on Transition members of 1987 scheme to 2015 scheme
THE END OF ‘CONTRACTING OUT’
With effect from 6th April 2016, ‘contracting out’ will be abolished. To find out what this means to employers and scheme members within the LGPS, Firefighters and Police Pension Schemes, please read our summary.Posted in Police | Comments Off on Circular 013/2015: Police Pensions – Additional Voluntary Contributions and 6 April 2015 flexibilities
The Pensions Ombudsman has published his determination in a case concerning the lump sum paid to a firefighter on his retirement. The case will have relevance to many firefighters and police officers who retired in the early 2000s.
Please note that it is still early days and the outcome of this recommendation is still under review. We are expecting to receive more information on this over the next 6 months and when we do we will then contact any members that maybe effected.
The bulletin explaining this and implications in more detail can be found here
Determination in Milne v GAD Q&A
31st July 2015
Following the determination of the Pensions Ombudsman in Milne v the Government Actuary’s Department (GAD), this document, provided by GAD relating to the Police Pension Scheme 1987, includes tables of factors to be used in calculating redress and detailed guidance for scheme administrators to aid them in calculating the amounts owed to individuals.
The following message has been received from the Home Office with regards to expected timescales:
The Government recognises that some administrators will need to assess hundreds of cases and that this will take time, but expects that pensions administrators will make the majority of calculations by December 2015 and the majority of payments by April 2016.
On Monday 2nd November all pensions administrators received a letter from the Home Office confirming the following:
Please accept our apologies that it has taken longer than expected to revert with advice in relation to discharge notices. We recognise that former officers are concerned about the issue. The topic has raised unexpectedly complex issues. However, the timescale for payments that we set out originally has not changed – the Government expects that pensions administrators will make the majority of calculations by December 2015 and the majority of payments by April 2016. We expect that these issues will be resolved shortly (i.e. within the next few weeks) and we will provide further advice as soon as possible.
Payments and funding
Some forces have asked whether they can take responsibility for commencing payments using their own discharge notice. Our recommendation remains that forces await the further advice that is to be provided.’
On Monday 16th November, all pensions administrators received a letter from the Home Office confirming the following:
‘Following careful consideration of the issue of the discharge notice, the Government has decided that, given the particular circumstances of this case, the use of discharge notices is not required in relation to these payments. Therefore, forces can make payments to the individuals affected in line with the guidance provided by GAD. I would like to thank you for your patience whilst we considered a complex set of issues that have unfortunately taken longer than expected to resolve.’
Therefore, Peninsula Pensions will shortly be advising both individuals and the Pensioner Payroll Team, of the amount of payment due. The majority of payments will be made with your normal January 2016 pension payment, due on around 1st January 2016 (nearest working day being 31st December 2015).Posted in Police | Comments Off on Ombudsman determination on lump sum commutation factors
All Police Officers should now have received a statement confirming the current value of pension benefits and where they fall under the protections with regards to the PPS 2015 scheme. We have now arranged the opportunity for all affected officers to attend a 2015 Scheme Members Presentation giving a general overview of the 2015 scheme. An email has been issued by Police HQ with the various venues/dates and booking links.
Posted in Police | Comments Off on POLICE PENSION SCHEME 2015