Your 1987 Police Pension Scheme Lump Sum — What's Changed & What It Means

The Government has undertaken a periodic exercise to adjust a financial calculation that affects how much tax-free cash lump sum officers under the 1987 Police Pension Scheme (PPS) can take when they retire. Your annual pension, which is the monthly income you receive for life, has not been cut and remains fully protected by law.

These changes do not affect officers in the PPS 2006 and PPS 2015 CARE schemes.

Only officers in the 1987 PPS who choose to commute part of their pension for a lump sum, and only those under this legacy scheme, retiring on or after 21 May 2026 are affected. Please be assured that your accrued pension rights are protected by statute. The Government cannot reduce the annual pension you have already earned. If you do not take any lump sum at all, nothing changes for you.

What changed?

On 19 May 2026, HM Treasury updated an economic formula of the 1987 PPS called the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate, which is a technical setting used to put a present-day value on future pension payments. It went up from the previous rate of CPI + 1.7%, last revised in March 2023, to CPI + 2.0%.

When this rate goes up, the Government Actuary's Department (GAD) must lower the commutation factors. The actual effect depends on a member’s individual circumstances. It ranges from 4% to around 2% of the maximum commutation payable. If you choose the maximum tax-free option, it is 1% of the commutation and 1% of the annual pension.

From 21 May 2026, new, lower exchange rates came into force for only those officers under the 1987 scheme.

Who is and is not affected?

Affected: circa 4% reduction in lump sum tax-free cash

• PPS 1987 members retiring after 21 May 2026 who take a lump sum
• McCloud remedy officers who choose legacy 1987 benefits for the 2015-2022 period

Not affected: no change whatsoever in commutation rates

• All PPS 2006 members (flat 4x lump sum rule remains unchanged)
• All PPS 2015 CARE members (fixed 1:12 rate set in law remains unchanged)
• Annual pension income for everyone in every scheme
• Survivor and spouse benefits (these are not reduced)

Why Were Pension Quotes Paused?

Pension administrators briefly suspended retirement quotations after 19 May 2026. This was a routine precaution, not a sign of any problem, to stop incorrect figures being issued while their systems were updated with the new GAD tables. Issuance of quotes is resuming as systems are updated. If you have any issues with calculations for an imminent retirement, please contact your local Branch Board office.

What To Do Next?

1. Check your scheme. If you are in PPS 2006 or PPS 2015, this change does not affect your lump sum calculation at all.
2. If you are in PPS 1987 and close to retirement, contact your force's pension administrator and request an updated retirement quotation using the new GAD factors.
3. If you have a McCloud remedy choice to make, take specialist advice before deciding, as choosing 1987 legacy benefits for the remedy period will interact with the new factors. Independent financial advice can be claimed via the compensation framework.
4. Speak to an Independent Financial Advisor specialising in public sector pensions if you are within two years of your planned retirement date.
5. Contact your Federation rep if you have questions or concerns. We are monitoring this issue closely.

In Summary:

The Government has changed the commutation factors which will reduce the amount of cash you can commute from your pension at retirement. This affects only those officers under the 1987 Police Pension Scheme who are opting for converting a part of their pension into tax-free cash lump sum (reduction of 4%). Your pension itself is not being cut. The income you have earned through years of service is guaranteed, protected by law and linked to inflation.

Get an up-to-date forecast from your force pension administrator. Take proper professional advice, if needed, and do not make any decisions based on canteen rumour.

There will be further actuarial revisions in the coming weeks and we will update members as soon as we are made aware of the changes.

PFEW is taking legal and actuarial advice on the changes to scope whether there are any avenues of challenge.

This document is for general information only and does not constitute financial advice. Members should contact their force pension administrator for an official forecast and seek independent financial advice for personal retirement decisions.

Sources: 

HM Treasury SCAPE rate update (19 May 2026)

GAD revised commutation factors (effective 21 May 2026)

New factors: police-ew-1987-scheme-commutation-factors-21-may-2026.pdf

NPCC FAQs: NPCC-SCAPE-discount-rate-changes-FAQs.pdf