Joining Police aged 44 - pension?

2016housebuyer

Would be grateful for some pointers on roughly how much a pension would pay if I were to change careers...

I’m currently in a Police civilian role earning 34k and am looking at joining as an officer, I’d be 44 by the time I start so would retire in 16 years at age 60. The pension situation is a big factor on deciding whether to apply as I'd be taking a fairly hefty pay cut in order to join, I'm not averse to struggling for 5 years if it means I get to retire at 60 rather than 68 as per my current LGPS pension.

The Police pension is now a ‘career average’ pension and the salary for the first 5 years is fairly low, before jumping up in years 6 and 7. So the first 5 years will obviously bring the average earnings down compared to someone younger that did the standard 30 years, 5 on low pay and 25 at the top salary - mine will be 5 on low pay and 11 at the top salary. Also the contributions are 13.44% v my current 6.5% and as I’ll be taking a pay cut to join this isn’t going to help my monthly finances. The upside is that by year 7 I'll be on 9k more per year than I currently earn as my current role is pretty much the top pay band I could earn as a civilian.

Is there anyone that could do the sums for me to work out how much I might be looking at receiving if retiring at age 60 (I know I won't have earned enough for a lump sum so would be looking at the monthly income only). I tried to find a Police pension calculator but it assumed that you had previous service in the old schemes and when I input my date of joining as last year, as it wouldn't accept a date in the future (and adjusted my DOB to match), the calculator automatically changed my date of joining to 01/04/2015 - which I'm assuming is when the CARE scheme began.

The current salary bands are as below, which includes a 2k South East allowance.

Year 1 £26,780

Year 2 £27,902

Year 3 £29,030

Year 4 £30,158

Year 5 £32,411

Year 6 £36,950

Year 7 £43,130

This is how the CARE scheme works:

During the first scheme year of your active membership you will accrue a block of pension which is 1/55.3 of your pensionable earnings in that scheme year. At the start of the second scheme year of your membership the block of pension accrued in the first scheme year will be increased by the percentage of the annual movement in the Consumer Prices Index (CPI) plus 1.25%. During that second scheme year of active membership you will also accrue a second block of pension based on 1/55.3 of your pensionable earnings during that second scheme year. At the end of the second scheme year the two blocks of pension will be added together and at the start of the third scheme year of your active membership the combined amount (of first and second year blocks) will be subject to an increase of CPI plus 1.25%. During that third year a further block of pension will be accrued and so on.

This process continues throughout your period of active membership of the CARE 2015 Scheme. So if you are a member for thirty years, you will accrue thirty blocks of pension which together will form your overall pension. The pension block you accrued in your first scheme year of active membership will have been increased annually thirty times by CPI plus 1.25% whereas the block of pension accrued in your thirtieth year of active membership will only be increased in this manner once.

dunstonh

You may want to edit your text size as it is barely readable on UHD screens and I suspect similar for smaller devices.

2016housebuyer

dunstonh said:

You may want to edit your text size as it is barely readable on UHD screens and I suspect similar for smaller devices.

Thanks, it looked small on my screen too but assumed that was the default forum text size! Hopefully it's more readable now

Dazed_and_C0nfused

It is entirely your choice when you retire, there is no need to stick rigidly to a pension schemes normal pension age.

Assuming that the South East allowance is pensionable (it may not be) then after 7 years you would have accrued a pension of  £4,142.  Further years earning £43,130 would add £780 each year.  So ignoring the inflation proofing and any pay increases you would have accrued just over £11k by age 60.

Although you fall under transitional rules for the State Pension you are highly likely to reach the standard new State Pension of £179.60/week if you continue to work the next 16 years.

So by your State Pension age you will have another £9.3k pension income plus whatever you have accrued in the LGPS.

There isn't much you can do about the contribution rates, they have no real relevance to the pension you are accruing in a DB CARE scheme.

Dazed_and_C0nfused

In fact it looks like the allowance isn't pensionable

https://beds.polfed.org/advice-regs/conditions-of-service/78-south-east-allowance

Which would make the first 7 years pension £3,888 and each subsequent years accrual £744.

The plus side is you would only be paying 13.44% on the pensionable income so for example in year 1 it would be a gross contribution of £3,330 (likely £2,664 after tax relief) which would earn you an inflation proofed pension of £448.

2016housebuyer

@Dazed_and_C0nfused

Thanks so much for the workings out, I know others who have taken different paths to me will have huge pensions and lump sums but I'd be very happy with c£11,000 as this means I *can* retire at 60, which is a huge bonus for me and well worth struggling money-wise for the first 5 years.

Could you explain a bit more about what this means in practical terms please? "Although you fall under transitional rules for the State Pension you are highly likely to reach the standard new State Pension of £179.60/week if you continue to work the next 16 years."

As I understand it my state pension age is 68 so I wouldn't receive the state pension until I reach that age, regardless of whether I receive my private pension at 60.

Dazed_and_C0nfused

You won't receive your State Pension until your State Pension age but there is a common misconception that you need 35 years of NI contributions to qualify for the standard new State Pension of £179.60/week but at the moment most people are under transitional rules which mean having 35 years doesn't matter. 

For youngsters starting to accrue qualifying years from 6 April 2016 then 35 years is important.

You had a starting amount at calculated at April 2016 and then each additional year adds 1/35th of the standard new State Pension amount until you reach £179.60.

As you have plenty of years left to work it is highly likely you will reach the standard new State Pension amount even if you stop earning at age 60.

The new State Pension is revalued each year so £179.60 will become £185.15 from 6 April 2022.

It might be prudent to check your State Pension forecast on gov.uk, in particular noting what you have accrued so far, usually shown to 5 April 2021 at the moment.

2016housebuyer

@Dazed_and_C0nfused

Thanks again, so the significance of this is that if I retire at 60 then I won't be paying NI contributions (due to being retired) and so I need to make sure I've paid enough in to receive the state pension at 68?

I've just done the gov.uk calculator: (have redacted my DOB)

Dazed_and_C0nfused

You should be fine.

Another 7 years (one of which you have probably already accrued during the current tax year) takes you to £179.11.

An eighth year adds the final £0.49.

2016housebuyer

Dazed_and_C0nfused said:

You should be fine.

Another 7 years (one of which you have probably already accrued during the current tax year) takes you to £179.11.

An eighth year adds the final £0.49.

Thank you so much for your replies, I never even considered the NI aspect and although it's not an issue in my case I'm glad I've been able to rule it out as being a potential issue.

jimi_man

Hi

I plugged those figures into a calculator I made when the pension changes were brought in a few years back. If you did the full 16 years then ignoring inflation (but including the 1.25% yearly uplift), and ignoring pay rises, then you'd end up with about £11.6k per year pension at 60 - as D&C suggested.

Without teaching you to suck eggs, joining the police as an officer is considerably more than just the pension and there are a lot of factors involved that make the pension a very small part of the decision to join. Obviously being in a police civilian role you have some idea of this, but it's worth pointing out. I went the other way - I did 30 years in the police then went into a civilian role (now in the Civil Service) and it was a massive wrench when I changed roles and the same would apply the other way round.

Good luck anyway, it's a great job. Shout out if you want any more pension figures.