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Lump sum ruling could benefit officers

Officers in the 1987 Police Pension Scheme (PPS) retiring with between 25 and 30 years' service could soon be allowed to convert up to a quarter of their annual pension into a tax-free cash lump sum after successful lobbying from the Police Federation of England and Wales (PFEW).

However, the payment will only be at the discretion of chief officers.

Andy Fittes, general secretary of PFEW, explains: "As you'll be aware, when they retire most members of the PPS are able to convert up to a quarter of their annual pension into a tax free cash lump sum. However, those members who retire from the PPS with between 25 and 30 years of service can generally only commute 2.25 times their annual pension. This means that the cash lump sums available to these members are considerably smaller and this reduces the flexibility available to them. It can also act as a disincentive for such members to retire.

"For some considerable time PFEW has lobbied the Home Office to remove this restriction on commutation and allow these members to commute up to a quarter of their pension like the other members of the PPS. We are very pleased to be able to say that as a result of our work Home Office ministers have now agreed to lift this restriction."

But, the Federation is disappointed that chief officers will be allowed to use their discretion over the payments due to concerns over the increased costs the change could incur for forces.

Chief officers will also be responsible for providing the funding for the difference between the normally permitted commutation and the new payment and it is felt this may limit the extent to which the discretion is used.

"We are disappointed that ministers have not removed this restriction entirely and PFEW will continue to make representations to the Home Office to that effect. However, in the meantime the timing of the implementation of this change in provision is unclear and we await consultation on draft amendment regulations. The Home Office has informed us that the change will not be retrospective," Andy adds.

PFEW will actively monitor in what way the discretion is exercised within forces.