The Annual Benefit Statement (ABS) is a statement that is sent to an officer each year up to the point they retire. An ABS shows the value of the benefits that an officer has accrued, benefits that would be payable to their beneficiaries in the event of their death and provides a projection to their normal pension age.

A Remediable Service Statements (RSS) shows what a member owes in terms of the remedy period and contribution adjustment.

A Police Pension Statement (PPS) is provided to officers where there has been an annual allowance breach.

ABS/RSS Rollout

The issue of annual benefit statements and remediable service statements for active members has not gone smoothly. There is a mixed picture across the country and there is a postcode lottery feel to this. This is not acceptable and PFEW continues to raise its concerns with forces, the NPCC, the Scheme Advisory Board for the pension, and the Home Office.

We won’t rehearse the arguments we have made and continue to make around the issues and the interest being charged and we have further meetings regarding this in the coming weeks.

On a practical level the only thing that needs to be decided at this stage is what to do with the contribution adjustment for tapered and unprotected officers. The choice of pension for the remedy period is not made until retirement.

1987 legacy members need to decide whether to pay the adjustment plus interest minus tax relief within three months of receipt of the ABS-RSS or defer it to another annual statement event or to retirement.

2006 legacy members need to decide whether to take the adjustment or leave it on account.

The issue with taking it now is if you choose the 2015 for the remedy period at retirement. There would then be a further contribution adjustment and you would owe the refund plus interest. If members keep the money where it is it will earn interest which will negate the above issue. If members choose the 2006 then they would get the refund plus the additional interest.

Members could also take the money and invest it themselves. They could take the money and spend it and then deal with any contribution readjustment at retirement.

As for the figures forecasted in the statements, they are not really an appropriate document for retirement planning as they use historical pay date and forecast to the age 60.

It is prudent to use their publication to check the fundamentals are correct. Date of birth, date of joining, pension brought in, reckonable service in the legacy schemes can all be checked and verified if necessary.

Administrators can provide quotes for specific dates in the future and they should be used. Currently they are only providing forecasts for months ahead this should open up further when the remedy work settles down. Again, any forecast beyond a year or so becomes speculative because of the unknown variables of pay rises and inflation.

ABS-RSS Rollout

PFEW is aware of the issues with the above rollout and are disappointed there have been so many issues.

We will be speaking with the NPCC over the coming days in order to get some clarity on how forces and administrators intend to address the failures and also the number of errors in statements that have been produced.

We would not expect any officer to be disadvantaged by the failures and errors and will be pushing for a freeze on interest and an increase in the window in which they can pay if there have been errors and failures to deliver.

There are three slides attached here which give an overview of the issues and also what officers should be considering now.

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We are aware of the concerns amongst our members regarding the ongoing issues with the Annual Benefit Statements - Remediable Service Statements (ABS-RSS) rollout, which was due to take place by 31 August 2024.

In order to resolve these issues, we recognise that chief constables of all the 43 forces in England and Wales must be made conscious of the strength of feeling amongst our membership.  

The contents of the letter we have written, jointly with the Police Superintendents’ Association, to the National Police Chiefs’ Council is below:

1. Failure to provide an ABS-RSS

Some forces failed completely while others have failed partially. Some are trying to rectify this as quickly as possible; others have stated that they will get the RSS published by 31 March 2025.

Forces have reported their failure to the Pension Regulator but we are unsure if all the failures have been reported. This is clearly not acceptable and adds to the uncertainty and is indicative of the general way that the remedy has been handled by forces and administrators. We all focus on the member journey and for many that has been awful and continues to be so.

We have asked for a countrywide compliance picture so that members have an idea of when they are likely to receive their RSSs. The delay has an effect on the interest as the longer it takes for them to be produced the more interest that will be applied to monies owed. It is our strong contention that this should not be the case and that no member should be worse off due to the inefficiency of the administration.

2. Providing an ABS-RSS with insufficient detail

West Midlands Police have produced RSSs with no contribution adjustment data on them. Many of the MPS RSSs do not have that information on them. They are not the only transgressors. Bearing in mind this is one of the main reasons for its production, it is a particularly disappointing omission.

The MPS have taken a pragmatic approach and have frozen interest at 31 August 2024 for those who want to pay the monies owed within the three-month window. We do not know how they are going to deal with those who are unable to or do not want to pay the monies owed in that window, will their interest be calculated from 31 August 2024 when interest starts to accrue again?

It would appear a national issue is transferees and forces are struggling to obtain the data from the previous force. This has resulted in delays in publishing their RSSs.

3. Providing an ABS-RSS with incorrect information

There has been a worrying number of members contacting the Federation due to errors in their ABS-RSSs. Part time workers seem to be particularly affected. There were part-time PCs at a recent Metfriendly event who had figures owing by them of £21,500, £18,000 and £14,500. These amounts are impossible to owe, and it raises concerns about the checks and balances in place regarding the process. They are not the only examples.

On the other hand, there are members who are clearly owed too little. There are other members with missing pensionable service. In fact, you name a pension error that could be made on a pension forecast and we have been provided with examples of it.

Members will be charged additional interest whilst they have to wait for these errors to be corrected. Again, that is not acceptable. It is getting to the stage where the sheer number of errors are making it impossible to have confidence in the documents produced and members may have to approach their forces to get professional help with the figures they have provided and claim compensation.

The compensation framework is an issue in its own right and we will not cover that in detail here. Many forces are yet to publish a policy and process for officers to claim compensation for professional advice. The gross position in many statements has also not been helpful, though we know that this can be addressed and will be addressed in future years.

There is a wider issue here, members have responsibilities with regards to tax and self-assessment. The approach to remedy is making these requirements more complex and for some unachievable.

The next big date for remedy is 6 October 2024 and the issue of Pension Savings Statements. This is a hard deadline, and we are concerned we are going to see a similar outcome to the ABS-RSS rollout. If there is going to be an issue with the PSS rollout, we would be grateful if the NPCC and the administrators can communicate that prior to the deadline not after it has not been met.

4. The use of 60 as the forecast date

PFEW has made the NPCC and SAB aware that this was going to be a problem. We understand the rationale given for the forecasting to 60, but it does not make the issue any less of one.

The majority of members do not want 60 as the forecast date, the majority want 55. The mitigation for the 60 forecast was, if you need another date forecast then approach your pension administrator.

Members are doing this to find that the administrators are not providing forecasts or are limiting the forecast to the next six months. This extra work was foreseeable. One force is suggesting that members go to an ex-Fed rep who is now a financial advisor to get a forecast. This is a total abrogation of their responsibility.

It is another area where the member journey is not as it should be.

5. Difference in approach adopted by forces

We have already identified the pragmatic approach taken by the MPS. We feel that other forces will not take such a pragmatic approach.

This creates discrimination by postcode and is not good enough.

Due to the issues being encountered we ask that the NPCC discuss with chief constables some form of amnesty on interest and dates interest can be paid by until the issues are resolved. It would be good if interest was frozen at 31 August 2024, for monies owed, for all and an extension to the three-month window given so that the many issues identified can be addressed.

6. Interest

NPCC is aware of PFEW’s stance on interest, it is unfair, unnecessary and unwieldy and it is adding complexity to the administration of the pension at a time when administrators clearly cannot cope.

It is incredible that members who did not know they owed money and even if they had could not have paid it are being asked to pay compound interest from the earliest date that they subsequently were found to owe it from. The Government have gone back to 2015 with the compound interest. On interest owing to members, it is simple interest. That is another unfair and unbalanced decision.

Interest is being levied because protected members paid the correct contributions at the correct time. Unprotected and tapered members were unable to do so because they were being discriminated against due to the discriminatory nature of the tapered protections.

Then to add insult to injury they were not informed in a timely fashion of what they owed but whilst waiting for the amount to be produced, which has taken years, not months, they are being charged further compound interest. The further delays due to the less than successful ABS-RSS rollout see them being charged more interest.

There was no ability to mitigate the interest and it is understandably causing anger and disaffection amongst members and will continue to do so unless it is addressed. All of the negative consequences of remedy appear to be falling on the members and that is how they are feeling.

The argument that the Government are paying members interest on money that they owe does not make the way the 1987 members owing contributions are being treated any better.

We know that the legislation gives a three-month window after each ABS-RSS to pay the monies owed in full. One of the questions we have received is why? It is a valid question why are members being prevented from paying the amount they owe when they want to and when they can. The lack of an installment plan has also caused anger. We know all of this is complicated but it is complicated because it has been made so, this is not the fault of the members but it is another area where they are bearing the consequences.

The picture for beneficiaries is not good either. There could be a circumstance where an orphan of a police officer who died in service could be asked to pay interest on contributions owing. We are already seeing spouses having to make that decision.

Administrators are struggling to cope and we have been at meetings where Scheme Manager representatives were asking whether they need to calculate an extra five days interest. Another where members had paid what was owed but the force did not have the ability to take the payments and were talking about sending them back.

Forces are paying administrators considerable sums of money for the calculations to be carried out. Surely these costs would be better used mitigating the issue for members. Economics in this situation should not just be about the plain figures, the detrimental effect this is having on members is also a cost and that needs to be addressed.

We know the NPCC was not in favour of interest being levied but we would now ask that the whole issue is considered afresh and if necessary, the Government lobbied in a joint approach from the employers and the staff associations so that we can make remedy fairer and more efficient for the members.

We will continue to update you through the newsletter at regular intervals. If you have questions or would like to see anything covered/updated in future editions of the newsletter, please e-mail pensionenquiries@polfed.org.

The end of August will see Forces send out ABS-RSS to all active and deferred members (Deferred Choice Members) who are subject to remedy

The Public Service Pensions and Judicial Offices Act 2022 (PSPJOA 22) came into effect on 1 October 2023 and provides the framework for the implementation of the remedy which will give members the same pension choices for the Remedy Period (1 April 2015 to 31 March 2022).

The remedy applies to pension scheme members who were in pensionable public service both on or before 31 March 2012 and on or after 1 April 2015, including those with a gap in service of no longer than five years. Members who joined from 1 April 2012 are not in scope for the remedy unless the circumstances described below apply.

The key to the above is pensionable public service not police service.  If a member joined the police on or after 1 April 2012 and had previous applicable pensionable service in a public service pension, then members will be subject to remedy and should receive an ABS-RSS in August. If they do not and feel that they are in scope, they should contact their pension administrator in the first instance and seek Federation assistance if there is an issue. For ease the link for police pension administrators is below.

Police pension administrator contacts - England and Wales - GOV.UK (www.gov.uk)

Annual Benefit Statements - Remediable Service Statements (ABS - RSS)

Rollback

All active and deferred members of the police pension schemes have been rolled back into their legacy schemes for the remedy period. The legacy schemes are the 1987 and 2006 schemes, and the remedy period is 1 April 2015 to 31 March 2022. The ABS-RSS is a document that will reflect that position and the reformed scheme position (2015 Pension) so that members can compare the benefits for both options. This will then become an annual event each August so that members can continue the comparison as they move towards retirement.

PFEW have been informed that the ABS-RSS will show the two pension positions at 60. If members want the position for other exit points, 30 years, 55 etc. then those forecasts would need to be dealt with by specific forecast requests to their pension administrator.

Most Forces will use a template devised by the NPCC and if there are any issues with the ABS-RSS then contact your pension administrator in the first instance, their details will be included in the statement.

The ABS-RSS will also deal with the contribution and interest position that rolling back into the legacy scheme triggered. Tax relief will also be owed or need to be paid back dependent on the legacy scheme (1987 owed, 2006 owing).

1987 Rollback Members

The contribution rate for the 1987 pension in the remedy period was 14.25% and for the 2015 scheme was 13.44%, hence contributions will be owed by members. The rates for those earning over £60,000 were 15.05% and 13.78% respectively.

The calculation for what is owed by 1987 tapered and no protection members is the difference in contributions between the 1987 and 2015 schemes minus tax relief owed to the member plus interest.

Interest is payable on contributions owed and is compound interest from the date of entry into the 2015 scheme to the date of settlement. The NS&I direct saver rate is the applicable rate.

The NS&I direct saver rate is currently 4%. The historical changes in rates can be found here: 

Historical interest rates | NS&I (nsandi.com)

The pension picture is changing quickly and currently it looks very likely that the ABS-RSS will provide gross figures and the tax-relief owed to members will not be calculated and thus the contributions and interest owed will not be correct as it will not show the tax relief position. The Treasury will change the directions in October so that future ABS-RSS’ will not have this issue.

In the meantime, if gross figures are provided and a member wants to pay off what is owed, they will need to contact their pension administrator so that an accurate figure can be provided. Scheme Managers have been informed that they can calculate the tax relief as if the aforesaid directions are in place. If there are any issues please speak with your local Federation office.

Monies owed can be paid in full within 12 weeks of the ABS-RSS being issued. There will be an opportunity to pay the full amount after every ABS-RSS which will be provided annually. If members do not pay the amounts owed before retirement, then it will be settled at the point of retirement.

2006 Rollback Members

The contribution rate for the 2006 pension in the remedy period was 12.05% and for the 2015 scheme was 13.44% hence a refund of contributions is owed to members. The rates for those earning over £60,000 were 12.75% and 13.78% respectively.

The calculation for monies owed to 2006 tapered and no protection members is the difference between the 2015 scheme and 2006 contributions minus the tax relief provided on the higher contributions plus interest. There is no issue with the calculation for the 2006 scheme and the amount quoted should be the amount owed to members.

Interest owing to members on contributions is paid at 8% and is simple interest. If a member does not take the monies owing the interest rate reverts to the NS&I direct saver rate on a compound basis 29 days after the issue of the ABS-RSS.

Monies owing to 2006 members can be taken once the ABS-RSS has been issued. If at retirement the member decides to take the reformed scheme benefits and has taken the monies owing, they will owe a shortfall in contributions. Members can keep the monies in their contribution account earning compound interest to cover this eventuality.

Other Members

Members who are not in scope of remedy will not receive an ABS-RSS but will receive an Annual Benefit Statement in August.

Members who were fully protected and remained on their legacy scheme for the remedy period will receive an ABS-RSS but will not be rolled back. The ABS-RSS will show the alternative benefits available if they were to choose the reformed scheme for the remedy period. There are no contributions owed or owing as they paid legacy contributions during the remedy period.

Deferred Members will have the same options as active members regarding taking the money they are owed or paying the money they owe due to contribution adjustments. They will make a choice of benefits when they access their deferred benefits.

What needs to be done upon receipt?

If members are in receipt of an ABS-RSS they do not need to make a final choice of benefits they want to receive, that decision is deferred to their eventual retirement.

All that needs to be dealt with at this point is the contribution adjustment.

2006 members do they want to take what is owed?

If they decide to keep the monies owed in their contribution account they can claim it at any annual ABS-RSS event or wait until retirement.

1987 members do they want to pay in full what is owed?

The added complication of only having the gross amounts will have to be dealt with by making a request for accurate figures from the administrator.

If they decide not to pay in full then there will be another opportunity with the ABS-RSS each August, or it can be settled upon retirement.

There could be issues with some officers not receiving their ABS-RSS at the end of August. Those officers will still have 12 weeks to settle what is owed or claim what is owed but from the date of issue of the RSS. This is not particularly helpful, especially to those who wish to settle what they owe and PFEW suggest taking this up with Forces as they will have incurred additional interest due to the late issue of the ABS-RSS.

Current retirements

Members retiring now will receive their pension options via an RSS around a month before their retirement and will need to make their choice of benefits at that point. Any contribution and interest issue will be settled as part of the retirement process.

This will be the process going forward for deferred choice members. Once they have put in their intention to retire, they will receive an RSS with their actual benefit choices around a month before retirement. At retirement they can decide to choose the reformed scheme for the remedy period or remain with the legacy scheme they were rolled back into. This could result in another contribution adjustment exercise.

Immediate Choice Members

Immediate Choice members are those who retired before the 1 October 2023 and are subject to remedy.

These members will receive their RSS before 31 March 2025.

Forces have until 31 March 2025 to remedy members who retired before 1 October 2023. They will be contacted by the pension administrators and provided with an RSS. This will show the same details as already described plus details of back payments owed for pension and commutation and the interest they are owed. There will also be a contribution adjustment required if they choose legacy benefits for the remedy period. Interest on monies owed is simple interest at 8%.

Immediate Choice RSS’ are now being issued, this is positive and welcome news.

However, in recent months another issue has been identified regarding taxation and interest. It is detailed in the link below and only affects those who took the maximum lump sum at retirement and paid a tax charge. All other members who retired before 1 October 2023 and are awaiting remedy are unaffected and there is nothing stopping them being remedied and it looks like administrators are now starting to deal with these cases.

IC-RSS-unauthorised-payments-update-V1.1.pdf (policepensioninfo.co.uk)

It looks like a solution has been developed for the tax issue and this is likely to be published in September and then members affected as described above will be able to be remedied. Further communications will be published when PFEW have the information on the solution to the tax issue.

The NPCC have several factsheets around the ABS-RSS roll out.

NPCC-Member-Remedy-Factsheet-Remediable-Service-Statements.pdf (policepensioninfo.co.uk)

NPCC-Member-Remedy-Factsheet-Contributions-adjustments.pdf (policepensioninfo.co.uk)

NPCC-Member-Remedy-Factsheet-Illustrative-examples-contributions-adjustments.pdf (policepensioninfo.co.uk)

Offsetting

PFEW have noted that members will not receive interest on the tax relief that they are owed as part of the 1987 commutation adjustments.

Members who revert or are rolled back into the 1987 scheme owe contributions. Tax relief is then taken off the amount owed, and interest is calculated on that amount which is payable by the member.

Members can argue that they are owed interest in these circumstances on the tax relief that they are owed. When PFEW have asked administrators, they have stated this will not be calculated due to the complexities involved.

The Government’s rationale for charging interest on contributions owed is that members had extra money in their pockets which they could have invested or used to purchase items that they would have not been able to purchase without that money.

It is not good enough to say we are not going to pay what we owe members due to the complexities involved but we have overcome the complexities around what members owe and are expecting members to pay that.

PFEW have produced templates for members to send to their Chief Constables asking for the interest on the tax relief to be calculated and paid.

The template required will depend on the position the member is in. There are three templates:

Retired member.

Immediate choice member and retiring member – will not be able to send until RSS received.

Active/deferred member – after receipt of ABS-RSS.

The Remediable Service Statement received by an officer will depend on the purpose they are receiving it for.

The Annual Benefit Statement/RSS for officers subject to remedy must be produced by 31 August 2024 and will provide details of the contributions owed or owing and the interest position.

All officers will be rolled back into their legacy schemes for the remedy period, they will show the legacy scheme benefits and the alternative reformed scheme benefit position so that officers can keep up to date with how both pension positions are accruing. The statements will be based on an assumption that officers will remain in service until age 60. PFEW made the point that age 55 will be of more interest to many officers but they are going to use age 60. The 55-exit point will have to be dealt with by requesting specific quotes from administrators.

The contribution position for monies owed can be settled within 12 weeks of the ABS/RSS being issued and again the following August and so on – ultimately it can be paid off at retirement.

The second type of RSS is the one that an officer will receive when they come to retire, their options document. This is a very important document and the remedy has made it more complex.

The first decision that should be made is which pension option is going to be taken for the remedy period, the legacy scheme or the reformed scheme. In most cases this will be a fairly straightforward decision as there will be an obvious financial difference.

Once the choice has been made there are several choices available and not all of them are reflected in the RSS’.

 The choices are, but may not be reflected:

• Take no commutation from either pension.
• Take the maximum lump sum from both pensions and pay tax on the 1987 commutation if younger than 62 years and 2 months – there is no tax implication on the 2006 and 2015 pension.
• Take the maximum tax-free option for the 1987 pension and the maximum commutation from the 2015 pension.

The above three options are the ones that are reflected on the RSS’ we have seen but there is also the option to:

• Take commutation from the 1987 scheme and not the 2015 scheme.
• Take commutation from the 2006 scheme and not the 2015 scheme.
• There is also the ability to reverse that position and take commutation from the reformed scheme and not the legacy schemes.
• Take a commutation amount from the 1987 or 2006 scheme of your choice up to the maximum lump sum amount and take no commutation from the 2015, the maximum from the 2015 or a chosen amount from the 2015 scheme.

There is greater flexibility in the choices available than is reflected in the RSS’ and we will continue to lobby for this to change.