Police Pensions

Part of the debate – in Westminster Hall at 4:26 pm on 28th November 2012.

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Photo of Damian Green Damian Green The Minister for Policing and Criminal Justice, The Minister for Policing and Criminal Justice 4:26 pm, 28th November 2012

I thank Keith Vaz for initiating the debate and for the kind remarks he made about me at the start of his speech. I can confirm that I am already nostalgic for the UK Border Agency. I entirely echo his remarks about the tremendous service that police officers give to their communities and the whole country. As he said, he and I attended the police bravery awards a few weeks ago. It was the first time I had attended, and I was struck dumb by the courage and heroism shown by all the winners. Even more importantly, I know from my own experience as a constituency MP, as well as from other experiences I have had as Police Minister, how that kind of service is provided on a daily basis across the country.

This afternoon, I would like to clarify the Government’s approach to public service pension reform as a whole, as well as what it means for police officers. As the right hon. Gentleman acknowledged, these are difficult economic times and we have to take difficult decisions, but we have equally made it clear that we are committed to reaching a fair outcome for police officers, and I hope to explain why I believe that that has been achieved. In the course of his speech, the right hon. Gentleman enjoined me to listen to the comments made by a number of organisations.

I should start by reminding the House of the context for pension reform. From the outset, we have been candid about the need for a fundamental review of public service pensions and of how they are funded and maintained. That is why my right hon. Friend the Chancellor invited Lord Hutton to chair the independent public service pensions commission. As a member of the previous Government and a former Secretary of State for Work and Pensions, Lord Hutton was well placed to undertake an independent and comprehensive review. He did a thorough job and made a compelling case for change. As he set out in his findings, the costs of public service pensions have increased over recent years, mainly because people are living longer, and the increasing costs have fallen largely to the taxpayer.

The Government are committed to providing good occupational pensions for public servants, but we must do so in a way that is affordable, sustainable and fair both to those workers and other taxpayers. That means, across the public services, moving to the career-average pension model in place of final-salary schemes. That also involves increasing the contributions that workers pay for their own pensions and raising the retirement age. The Public Service Pensions Bill, which is currently before the House, sets out the high-level framework for those reforms, with work force and scheme-specific details to be implemented through regulations in due course.

To put all that in context, the latest figures from police forces show that, in the 2011-12 financial year, across England and Wales more than £2.8 billion was paid out in police pensions. Such pensions are paid to retired officers who have a legal entitlement to receive them. I hope that gives Members a sense of the scale of the issues and finances involved.

The right hon. Gentleman raised a specific point about police pension contributions. It is true that police officers pay among the highest contributions in the public services. That is because the pension is significantly more valuable than most others, as it should be.

As part of his report, Lord Hutton commissioned a comparative analysis of the benefits that workers get out of pension schemes based on what they contribute themselves. He found that, aside from those in the armed forces, who do not contribute to their pensions, police pensions are more valuable than most, as they are generally drawn from an early age and paid for longer in retirement. That is even taking into account the relatively high contributions paid by police officers.

I was struck by the verdict of Police Mutual, an independent financial adviser that specialises in services for the police. Its assessment, in response to the increased contribution rate, states that

“the Police Pension Scheme remains one of the best financial investments you are ever likely to make.”

People should listen to Police Mutual, because it knows whereof it speaks.

While I am on that subject, I am happy to reassure my hon. Friend Mrs Main that the new scheme does not have a service requirement, so female officers will not be disadvantaged for taking career breaks.