Return as Police Staff

 

 

PROTECTED PENSION AGE - RETIREMENT AND RE-EMPLOYMENT

 

 

 

There is a potential tax issue for members of the 1987 Police Pension Scheme (“the PPS”) who retire and take a pension under the age of 55 and then take up employment as police staff or are re-engaged as police officers.

 

 

 

What follows is a summary of the issue as we understand it. It is not intended to be a comprehensive or definitive statement of the law or the tax position. There may be other factors which are not addressed in this document that affect the position. Any retiring member who is considering taking up employment as a member of police staff or being re-engaged as a police officer must satisfy themselves that the implications of doing so are not so adverse as to amount to a deterrent. That may involve seeking assurances from the Force, Police & Crime Commissioner, HMRC or taking independent tax advice.

 

 

 

Our understanding of the issue is drawn from the HMRC guidance (click here for linkto HMRC), it is summarised, as follows:

 

 

 

  1. From 6 April 2010, the Minimum Pension Age rose to age 55. The rights of members of the PPS to retire in certain circumstances before that age were protected and those members have a Protected Pension Age.

     

  2. However, that protection can be lost in certain circumstances, meaning that payments become unauthorised and taxable.

     

  3. The particular concern is that on re-employment by certain employers, including for our members potentially a police force or police & crime commissioner, one of four conditions must be satisfied in order for a member aged between 50 and 54 to remain protected.

     

  4. Those conditions are broadly:

 

  • recall by the Armed Forces

  • a break in employment of at least six months

  • a break in employment of at least one month and benefits may be abated

  • a break in employment of at least one month and the re-employment is materially different

     

 

  1. In relation to abatement HMRC guidance states: “An individual taking benefits from a public service pension scheme who, after one month following becoming entitled to benefits, becomes employed by any of the employers mentioned in RPSM03106064 will not lose their protected pension age if their scheme pension is liable to be reduced by abatement. The pension does not have to be actually reduced, just liable to abatement. For example ‘A’ takes benefits from public service scheme X. After 1 month ‘A’ returns to work for employer X but for reduced hours. ‘A’s pension and new pay level are tested by the scheme to see if their pension should be abated. ‘A’s pension does not need to be reduced, but because it was tested for abatement and could have been reduced ‘A’ keeps their protected pension age for the benefits in payment.”

     

  2. In relation to re-employment being “materially different”, HMRC’s guidance states: “A simple change in hours will not be a materially different employment. To be a materially different employment the duties and/or the level of responsibility in the new employment must be different from the old employment.”

     

    Protected pension age <50

     

    Re-employment has no impact on protected pension age. However, abatement will apply if re-employed as police officer.

     

     

    Protected pension age 50-54

     

    Where date of leaving is before 6th April 2010:

    Re-employment has no impact on protected pension age. However, abatement will apply if re-employed as police officer.

     

    Where date of leaving is on or after 6th April 2010:

     

 

 

Break in Employment

< 1 Month

1 Month to 6 Months

6 Months and over

New Employment Type

Employer

Pension Abated

PPA Retained

Pension Abated

PPA Retained

Pension Abated

PPA Retained

 

Police Officer

Own Force

Y

N

Y

Y

Y

Y

Other Force

Y

Y

Y

Y

Y

Y

 

 

 

 

Police Staff

Own Force

N

N

N

Y*

N

Y

Other Force

N

Y

N

Y

N

Y

Any Other Body

N

Y

N

Y

N

Y

 

 

 

* IF the reemployment is “materially different in nature”.  HMRC have stated on their technical pages that:

 

“A simple change in hours will not be a materially different employment. To be a materially different employment the duties and/or the level of responsibility in the new employment must be different from the old employment.”

 

 

 

We cannot provide you with Financial Advice but encourage you to seek assurances in the circumstances of your case from the Force, or Police & Crime Commissioner, or HMRC and to consider taking your own independent tax advice. Individuals are responsible for their personal tax liability and should seek independent taxation advice where they are unsure as to the effect of re-employment.

 

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