Cost of police pensions rises nearly 80% in 15 years

The cost of police pensions has risen from less than £1 billion a year in 1995/6 to almost £2.5 billion a year in 2009/10, according to research by think tank Policy Exchange.

According to the report, Police officer pensions: Affordability of current schemes, the figure represents a 79% increase in real terms.

The report said the increased cost is due to rising life expectancy and fewer active members.

Taxpayer contributions to police pensions more than doubled from £951 million to £1.9 billion between 1995/6 and 2009/10, while police officer contributions fell from 31% to 23%.

Without reforms to the current pension arrangements all officers up to 2036 who receive their full pension entitlement will have a pension pot worth between £500,000 and £2 million.

To avert a future funding crisis, the report recommended:

  • In the short term, there must be a move away from a final salary to a career-average scheme, and a raise in the standard retirement age to 60. Personal contribution rates may also need to rise, especially for the most senior ranks, but need to be affordable for officers.
  • In the longer term, the government should design a ‘new model police pension scheme’. This scheme, phased in over time, would remain more generous than the public sector average, but would be less expensive and incorporate greater choice for officers. In line with moves towards a more modern and professional service, this new scheme should be open to civilian staff for the first time to help create a more united and flexible police workforce.

Edward Boyd, research fellow at Policy Exchange and author of the report, said: “Police officers’ pensions have become increasingly unaffordable for taxpayers.

“A growing pensioner population, primarily down to increased life expectancy coupled with only minimal changes in the retirement age, has increased costs substantially over the last decade.

“The more we have to pay for pensions, the less police forces have available to spend on hiring officers to fight crime.

“We desperately need a new police pension scheme fit for the modern world. Without reducing costs, police officer pensions will become unaffordable for taxpayers and for officers themselves.”

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