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New financing system for police/fire pensions introduced from 1 April 2010
In October 2008, the Scottish Government and the convention of Scottish Local Authorities (COSLA) reached agreement on the extra funding needed to offset pressures on the police service and the fire and rescue service caused by a record number of retirements. As part of that agreement, a way forward on reforming the funding arrangements for police and fire pensions was negotiated.
As a result a Steering Group was set up to progress the police and fire pension reform project. The Steering Group consists of representatives from:
• the Scottish Government
• COSLA
• Association of Chief Police Officers in Scotland (ACPOS)
• Chief Fire Officers Association (Scotland) (CFOA(S))
• Police Conveners Forum
• Fire Conveners Forum
In addition to the Steering Group, a Working Group was established in order to manage the changes required to introduce the new financial arrangements. The Working Group is made up of members from:
• the Scottish Government
• ACPOS
• CFOA(S)
• Local Authority Directors of Finance
The members of both the Steering Group and the Working Group support the new financial arrangements and guidance has been issued that outlines the new procedures. Briefly under the new arrangements, police service pension costs (with the exception of injury benefits and ill-health capital charges) will be met through a combination of employee contributions, a new actuarially-based employer's contribution calculated as a percentage of pensionable pay and, as required, a "top-up" payment by the Scottish Government. Authorities will be required to set up and maintain a new pension account into which defined income will be made for example member and employer contributions and out of which pensions in payment will be made. Any shortfall between the pension account income and expenditure will be met by top up payments from the Scottish Government and any surpluses will be taken into account as part of future pension funding.
A consultation on the regulations that provide for the new system were issued for consultation on 18 March 2010 and can be viewed along with the guidance on the following links:
Police Finance Regulations (Scotland) 2010
Guidance on financial arrangements for police pensions 18-03-2010
This release is now on the Scottish Government website, here:
http://www.scotland.gov.uk/News/Releases/2010/03/25171039