Police Pension vs Private

Smokey2005

Hey guys,

I'm currently going through the police application stage and hope to start training mid august if i get in. One question that is bugging me currently is whether to join the police pension scheme or opt-out? The government have recently announced a shake up and a new revised version shall exist from January 2006... so really it's either i join the scheme now... or lose out i guess. Are there any perks to not joining? 11% of salary seems a lot to me but i guess you get a lot out at the end of it?

A link to the pension details can be found at:

http://www.policespecials.com/forum/index.php?showtopic=16722

Is there any better scheme around? I personally don't like the idea of the government looking after my future funds... and am interested in for example putting savings monthly in an ISA for 30 years... or an eqiuvalent. Any income drawn out of them is tax free.. you can take what you like when you like... and putting a monthly contribution in of say 325 according to abbey nationals own savings calcualtor would bring back a nice nest egg of near 250k after 30 years.....

Any thoughts?

Regards.

dunstonh

Is there any better scheme around?

No.

You wont find a single advisor to put you in a personal arrangement unless you are already in the police scheme and are using a personal arrangement for top up.

I personally don't like the idea of the government looking after my future funds

A govt backed occupational pension is about as safe as you can get. Its the rest of us tax-payers that are paying the bill.

and am interested in for example putting savings monthly in an ISA for 30 years... or an eqiuvalent. Any income drawn out of them is tax free

ISAs don't have 30 years of life on them. At least not guaranteed anyway. Conservatives have other ideas to replace the ISA. Income is not really tax free. Distributions have already had the tax paid. You just dont pay any tax.

and putting a monthly contribution in of say 325 according to abbey nationals own savings calcualtor would bring back a nice nest egg of near 250k after 30 years.....

Which will really be worth a lot less than 250k in real terms and wont provide anywhere near the income that the police pension would pay out.

EdInvestor

Hi Smokey

Got a better link to the police scheme rules?

Generally Govt schemes are well worth it, but IMHO your question marks are sensible and more info is needed to take a view.

isasmurf

Home Office Consultation Document (Dec 2003)
Police Federation News Bulletin (May 2005)

Looking at these documents, you'd struggle to find a better pension than this.

Smokey2005

Sorry i dont really have any more documents or links to the current pension scheme. The documents that ISASMURF has attached to his reply represent the new pension scheme that the goverment is bringing in Jan 2006. If i were to join, i would still be under the old pension rules as i would be joining before this date.

Like my link says, it is 11% of salary until you retire. After this time you get 2/3 of your final salary for life (also linked with inflation). A bobby who i know has recently retired got a 86,000 pound payout immeadiatly after retiring and is now picking up a pension of 19,000 a year before tax. Seems to good to be true. Any other comments would be greatly appreciated.

Johnocyprus

In the current circumstances with the pension crisis about to become ctitical in the the UK and Europe you have the opportunity to get into the old Police Pension Scheme before it changes. Soon to get a full Police Pension entrants will have to work 35 years to get a full pension and 35 years of shift work will not be fun. 11 per cent of salary seems a lot but to be able to get this pension plan in 2005 is a wonderful opportunity -grab it whilst you can and don't let them defer your entry date!

DavidLaGuardia

I thought that a full pension could be obtained in the Home Office pension scheme after 30 years (1/60 for 20 years then 1/30 each year for 40/60 at year 30) you cannot go beyond the age of 55 unless you are an inspector or above then the age is 60. I think you can get a maximum of 5 years addtional benefit working beyond this normal retirement age under current inland revenue rules if the scheme permits (British Transport Police I think have a scheme that also reaches the same target after 30 years but its equal throughout ie. 1/45 per year and there are other differences, for example it is a funded scheme, the home office one isn't)
Last time I looked (and this may have changed for new joiners) after 25 years you could get your pension immediately at whatever age, otherwise it was deferred to age 60 (heavily reduced benefits being avaiable from age 50).
<<EDIT I AM OUT OF DATE GO TO THE LINK ISASMURF GAVE ABOVE>>
Whatever the cut and thrust of the matter 11% is a no brainer as it would cost much much more than this to do it yourself and get equivalent benefits. It is higher than other statutory schemes require (such as 6% in local government, but you can get a full pension qucker and earlier) Do it and plujsalongside all the other benefits that come with the scheme such as life cover, spouse pension and early pension for sickness it is really worth it.
<<11% or 9.5% COMMENTS STILL APPLY>>

knuckledragger

I have a couple of mates who are coppers. Both of them are thanking their stars that they are in the current scheme. One can retire when he's 48 with a full 30yr pension. Taking his maximum commutation he'll have a lump sum of about £90K (currently tax free) and a residual pension to go with it. They both think that the scheme being introduced in April 2006 is a massive shaft by the Home Office and is effectively a cost cutting exercise. It has a few little sweeteners such as assigning the pension to a same sex partner but the expectation is that they want a work force that gives 5 or 10 years hard work and then goes off to do something less arduous when they become burned out. Taking their pension contributions with them. Who'd be a copper next year?

frugal_dougal_3

Smokey2005 wrote:

A bobby who i know has recently retired got a 86,000 pound payout immeadiatly after retiring and is now picking up a pension of 19,000 a year before tax. Seems to good to be true. Any other comments would be greatly appreciated.

This figure would depend on what rank your friend was at the time he retired, and they also take into account the final years salary when calculating the pension which includes overtime and any temporary duties (acting sergeant, acting inspector etc) so the above is possible.

Join the scheme. You won't get anything better. It's because it's good that the government want to change it!!!!

frugal_dougal_3

Further to my previous post. This might help you decide.
http://www.apolicemanslot.co.uk/pension.html

I am not the author of it.

ReportInvestor

Smokey2005 wrote:

Seems to good to be true. Any other comments would be greatly appreciated.

It is too good to be true. Say a special prayer of thanks to the taxpayer ever morning .

Pensions Commissioner would like workers to carry the risk of longevity - not the state or employers