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Tax/Pension Issue

HMRC Tax/Pension Issue

The following email has been circulated by Ian Rennie, the General Secreatry of the PFEW, in relation to the impact of taking an occupational pension below the age of 55 and then taking another job as a staff member of the force. The position is very unclear and anyone concerned with this issue should seek independent financial advice on their personal circumstances. The Federation currently has no further information and, under FSA rules, is unable to advise officers on any financial concerns. Force HR have been informed and you could also contact them for advice on the employment issues raised.

Dear Colleagues

I have been unable to obtain a binding interpretation on a point of tax law but we think that Robin Woodhouse is correct.  The key passages of what he says are:

Where the protected pension age is between 50 and 54, the member must not be re-employed by the sponsoring employer of the scheme that employed the individual in the six months before the benefit entitlement arose or any person connected with the sponsoring employer or any sponsoring employer in the pension scheme that is connected with the individual.

The exceptions to the above rule are:

  • A break in employment of at least six months; or
  • A break in employment of at least one month if benefits are abated or the employment is materially different.

Once the individual reaches the normal minimum pension age of 55 these restrictions cease to apply.

In other words any member of the Federated Ranks who retires with an ordinary police pension under the PPS before the age of 55 must (with a limited exception) now take a break of at least one month (calendar month – eg 5th to 5th of the next month) before starting a new job.  I hope that is in clear enough English. 

The only exception is for those with a protected pension age (PPA) of under 50.  This means any member of the PPS in the Federated Ranks who completes 30 years’ service before 50 and arguably includes those who could have retired on a 30-year pension before 50 but did not do so and retired between 50 and 54.  To be absolutely sure, this last point should be checked.

The other matter which it would be prudent to check is what exactly the following means:

Where the protected pension age is less than 50, the member must not be connected (eg relative, partner or business partner) to the sponsoring employer.

That would seem to put all such police officers in the clear if the “sponsoring employer” refers only to the employer which the officer has left on retirement. It might just be worthwhile to double-check that it does not also refer to the new employer.  It is possible that officers may enter into partnerships etc on retirement.

It is because of the need for a month’s gap that the HO included that requirement in the revised guidance on 30+.   In that case it is the same job but the pension is abated.  In the case of a police staff job the argument is that it is materially different – no warrant etc – but still a month is needed.

Finally, one more point (which may not sound helpful but needs to be borne in mind):

  • every citizen is personally responsible for their tax affairs and for observing tax requirements.

Hopefully most officers took a break or have a claim to a PPA of under 50.  If there are cases where there is a problem it might be possible to sort the issue out with the relevant local tax inspectors with a view to getting a “caution” in police parlance.  But that probably needs prior tax advice on the best handling of the cases.

I hope that this assists

Ian Rennie

General Secretary

Police Federation of E&W