Police Injury Pension Analysis

CONFIDENTIAL

1. Police injury pension - overview

A police injury pension is in effect compensation for work related injuries. An injury pension is not dependent on member ship of the scheme i.e. you do not have to be a member to benefit from the scheme.

The level of pension paid is dependent on the degree of injury and the impact which it has on the earnings capacity of the individual (hence the compensatory element). For example, an individual may be entitled to an award but as their condition has little impact on their earnings capacity in the civilian environment, they would only be granted the minimum level (lowest band). Conversely, where the injury has made serious impact on earnings capacity, even rendering the individual incapable of performing any type of work then they will receive the highest amount (top band).

The ‘banding’ table is laid down in Police Pension Regulation B4 and makes distinctions between the degrees of disability. This dictates the amount of gratuity and pension paid (length of service is also a factor in this calculation). Basically, the bands are as follows;

 25% or less (slight disablement)  more than 25% but not more than 50% (minor disablement)  more than 50% but not more than 75% (major disablement)  more than 75% (very severe disablement)

The amount of pension actually payable by the fund is affected by the amount and type of benefits the individual may be claiming. Although this has no impact on the review process, it is an important point of note in the respect that some pensioners claim maximum benefits thereby reducing the amount the fund pays to them whilst other pensioners claim no benefits and take the maximum amount possible from the fund. One point of note is that should a review take place where the amount of pension paid is reduced, it may be possible for the pensioner to make a benefit claim to ‘top up’ their income.

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2. Current situation

There are currently 307 injury pensions payable on a monthly basis by Lancashire Pensions Services. The total amount of injury pensions payable per month is £135,703.92

By age group

Age range No of pensioners Total monthly sum payable

Less than 40yrs 6 4,203.88 40 - 49 47 27,605.98 50 - 59 79 38,379.78 60-64 56 21,607.30 65+ 119 43,906.98

Current review process

1. Lancashire Pensions Services provide a reminder directly to indicating that a review is due to take place. Alternatively, the retired officer may contact Health Services direct and ask for a review to take place, usually because they feel their condition has deteriorated.

2. An appointment is made for the individual to see the FMA where an examination/consultation takes place. The FMA would obtain consent to contact the individuals GP and consultants where appropriate.

3. The FMA would then review the medical information in it’s entirety, taking into account his own examination, opinion of medical practitioners, and whether or not the individual is currently working or not. The FMA would then decide whether or not the current level of disability is appropriate. The formula for this calculation is as follows:

Salary at rank – potential ‘civilian’ salary x 100 Salary as rank

e.g £34,707 (PC) - £20,000 (security adviser for example) x 100 = 42% £34,707

3. Process suggested by the Home Office

Home Office circular 46/2004 (Annex 1) suggests two significant changes to the way in which injury awards are calculated and reviewed :

1. Review of Injury Pensions once Officers reach Compulsory Retirement Age

Once a former officer receiving an injury pension reaches what would have been his compulsory retirement age under the Police Pensions Regulations (55, 57, 60 or 65 depending on the person’s force and rank at the point of leaving the police service) the force should consider a review of the award payable, since it is no longer appropriate to use the former officer’s police pay scale as the basis for his or her pre- injury earning capacity.

In the absence of a cogent reason for a higher or lower outside earnings level, it is suggested that the new basis for the person’s earning capacity, had there been no injury, should be the National Average Earnings (NAE)* at the time of the review. The NAE figure taken should be the average for the population overall. Separate figures for males and females, and regional fluctuations should not be considered. The loss of earning capacity for the purpose of establishing Degree of Disablement should therefore be assessed by reference to the % proportion the person’s actual earning capacity bears to NAE.

This procedure should help to ensure that former officers are treated in a consistent way across forces. They will be placed on an equal financial footing with others in the employment market at a time when they could not have been assumed to be earning a police salary.

After a review at compulsory retirement age a force should determine the need and date for the next review. In some cases there may be particular circumstances which make it undesirable to conduct a further review.

2.Review of Injury Pensions once Officers reach Age 65

Once a former officer receiving an injury pension reaches the age of 65 they will have reached their State Pension Age irrespective of whether they are male or female. The force then has the discretion, in the absence of a cogent reason otherwise, to advise the SMP to place the former officer in the lowest band of Degree of Disablement. At such a point the former officer would normally no longer be expected to be earning a salary in the employment market.

A review at age 65 will normally be the last unless there are exceptional circumstances which require there to be a further review.

The advice in this case appears to relatively straightforward with the SMP being advised to place the individual in the lowest band as a matter of course.

EXAMPLE 1

retired police constable at age 60, using current PC earnings

34,707 – 17,000 x 100 = 51% 34,707 retired police constable at age 60, using National Average Earnings

27,693 – 17,000 x 100 = 38% 27,693

EXAMPLE 2

retired police inspector at age 60, using current Insp. earnings

48,234 – 22,476 x 100 = 53% 48,234

retired police inspector at age 60, using National Average Earnings

27,693 – 22,476 x 100 = 18% 27,693

4. Practical/cost issues

Police Injury benefit Regulation (PIBR) 37 allows regular reviews of officers in receipt of injury pension. The current position is that a review will be conducted on request of the officer and this is carried out by the FMA.

If the reviews were to be carried out on a more regular basis, the FMA would not have the capacity to conduct these and as a result, the costs of such a policy would increase considerably.

As an illustration of potential costs;

There are 307 pensioners. To review on a 3 year cycle would mean 102 cases reviewed per annum (Home Office suggest reviews should be no less than every 5 years and no more than every 2 years)

SMP fees To obtain medical records e.g. GP notes etc - £100 per case, An independent SMP would charge approximately £500 per case.

Medical appeal boards If the officer then lodged an appeal against the findings, the SMP would charge a further £1000 to attend the hearing and this would be in addition to the actual cost of the Home Office appeal itself, currently £6,100. Therefore, each case has the potential to cost £7,700.

102 x £7,700 = £785,400 pa

TOTAL COST OVER 3 YEARS £2,356,200

Administration For each case to be processed to the point of SMP review, I would estimate administration time of 5 hours. Post review, including appeal administration and attendance, a further 8 hours. Total time required per case is therefore 13 hours. 102 x 13 = 1,3,26 hours pa

This would cover ongoing reviews but experience shows that for various reasons, the review of a case can take longer than 12 months and therefore, further admin support would be necessary in order to ensure ongoing cases did not halt when the second ‘wave’ of reviews started up in Year 2. In my experience of dealing with these matters, I would expect admin support to be of an advisory level (e.g LC 7 - £25,080pa.)..

Legal costs Any decision to pursue the recommendations of reducing the award at Compulsory Retirement Age and State Pension Age would need to be fully explored at a legal level, particularly taking into account age discrimination legislation.

Travel costs Pensioners would be entitled to claim costs of travel to the SMP

Lancashire Pensions Services Any change to the current procedure would of course have an impact on the work carried out by Lancashire Pensions Services

In addition to the financial costs there are further issues which should be taken onto account ; NARPO/Federation stance likelihood of letters of complaint etc to Chief Constable legal action by individuals and/or NARPO

5. Regulatory and Legal issues

Police (Injury Benefit) Regulations 2006

Reassessment of injury pension

37. —(1) Subject to the provisions of this Part, where an injury pension is payable under these Regulations, the police authority shall, at such intervals as may be suitable, consider whether the degree of the pensioner's disablement has altered; and if after such consideration the police authority find that the degree of the pensioner's disablement has substantially altered, the pension shall be revised accordingly.

(2) Where the person concerned is not also in receipt of an ordinary, ill-health or short-service pension under the 1987 Regulations, if on any such reconsideration it is found that his disability has ceased, his injury pension shall be terminated.

(3) Where payment of an ill-health pension is terminated in pursuance of regulation K1(4) of the 1987 Regulations, there shall also be terminated any injury pension under regulation 11 above payable to the person concerned.

(4) Where early payment of a deferred pension ceases in pursuance of regulation K1(7) of the 1987 Regulations, then any injury pension under regulation 11 above payable to the person concerned shall also be terminated.

Police Injury Benefits – Consultation exercise

In 2008, the Home Office issued a Consultation document regarding police injury benefits. Interestingly, neither of the suggested review points (Compulsory Retirement Age and State Pension Age) appear to be submitted for inclusion in Regulations – they seem likely to remain ‘guidance’ and therefore, open to interpretation.

6. Options

A survey of Forces throughout the country revealed a number of different approaches to this Guidance.

The intention of the Home Office circular 46/2004 was to standardise the approach to injury pension reviews across all Forces. From the evidence to date, it would seem that this has not been achieved. Some Forces are not applying it all (Cleveland), some are applying it wholeheartedly (Sussex) and some are not reviewing anyone age 65 or over so their pension will remain unchanged but are advising those under 65 that at compulsory retirement age, it will be recalculated and at 65, it will be reduced to Band 1 (Avon & Somerset).

OPTION PROS CONS

OPTION 1 Status quo. ‘Politically’ Ongoing cost of pension Review injury awards as they sensitive payments. SMP and admin become due but do not adopt costs (1) & (2)

OPTION 2 Apply (1) & (2) to all injury May be seen as sensitive to Number and value of injury pensions awarded after a current pensioners pensions already in payment certain date e.g. 1.4.07. but would make this a costly not those pensions awarded option in the long term prior, even if they are due, or Potential for discrimination request a review

OPTION 3 Potential for saving Increased costs in respect of Apply (1) and (2) to all monthly pension costs FMA/SMP time and injury awards regardless of administration costs/time date of retirement and age Risk of appeals and legal challenge

7. Significant other issues

The majority of those in receipt of injury pension retired pre 2003. Prior to this date, the standard of evidence required and the interpretation of the Regulations were not as strict as the present time and there is a possibility that upon review of the injury pension, the officer may actually be found to be no longer permanently disabled. This then raises the question of whether the pensioner should be invited to re-join and all of the associated processes e.g. vetting etc.

CONFIDENTIAL