Opting out

Opting out at the end of an officer’s service was a regular occurrence with the 1987 pension as there was a maximum accrual and once that was reached it was a viable consideration. It is still a consideration but there is no such thing as a full pension as accrual is uncapped and continues as long as there are contributions.

Although opting out is still a consideration, whenever it is considered, independent financial advice is prudent. Obviously, it is just not an end of service thing as officers consider it at other points of their service. The generic considerations are below.

An officer can opt out by contacting their pension administrator.

Currently there is no medical required to opt back in - that may change as the Home Office is rewriting the regulations.  If an officer opts back in within five years their previous pension will become active again.

There is a loss of the death in service benefit at opt out—this can be covered cheaply with term life insurance.

There is no ability to claim an ill health retirement pension, though an officer can still claim an injury on duty pension if applicable and to bring their deferred pension into early payment due to ill health.

The pension will be index linked from the date of opt out and will be based on the final salary at opt out. The pension will increase with CPI but not pay rises.

Deferments

If you opt out of any of the pension schemes before an immediate benefit is available then the pension becomes deferred – if you opt back in within five years it becomes active again.

The deferment ages differ dependent on the pension.

1987 deferred to age 60, if over 25 years’ pensionable service in total deferred to age 50.

2006 deferred to age 65, can be taken at 55 but with a 50% actuarial reduction.

2015 deferred to State Pension Age - there is an opportunity to take at 55 but with a close to 50% actuarial reduction.

Deferred pensions can be brought into early payment due to ill health

Different criteria for the different pensions.

1987 – will be brought into payment if the officer is permanently disabled for the ordinary duties of a police officer.

Will only be immediately index linked if permanently disabled for regular employment.

2006 and 2015 – will be brought into payment if the officer is permanently disabled for regular employment.

Will only be immediately index linked if totally and permanently disabled for any employment.