No ‘adverse tax impact’ on pensions of returning officers
The Treasury has confirmed that the pensions of officers who come out of retirement to rejoin their forces in response to the Covid-19 crisis will not be affected.
In a letter to Minister of State for Crime and Policing Kit Malthouse this week, Economic Secretary John Glen said the Treasury intends to “temporarily suspend the tax rules” that would otherwise reduce pension income for recently retired workers aged between 50 and 55 who were returning to take on roles to support the Government’s response to Covid-19.
He added: “Without this change, and complementary changes also being made to scheme rules for relevant public sector pension schemes, there would be a risk that individuals would see pension income reduced so that their net of earnings and pension income do not exceed earnings prior to their retirement, and they could face adverse tax consequences on their pension benefits.
“I note, in particular, that these changes will ensure that retired police officers who return to work are not penalised financially.”
Mr Glen said the measures were designed to ensure that it could continue to provide important public services at this time.
“As these proposed tax changes form part of our response to Covid-19, they will initially apply in respect of payments made in the period from March 1 to June 1 2020,” he said, but would keep this time limit under review.
Mr Glen said Her Majesty’s Revenue and Customs would set out detailed operational guidance in due course, but stressed this measure will apply only to people returning to roles as a result of Covid-19 – particularly for core workforces such as the police – rather than a general lifting of these restrictions.
“I consider that these rules, and associated restrictions through the rules of relevant public sector pension schemes, remain a reasonable and proportionate way to manage costs to the taxpayer in normal circumstances,” he added in the letter.
“I trust that this will give you the confirmation that you need to reassure key workforces that they can encourage recently retired workers to return to service to bolster the Government’s response to Covid-19 without having an adverse tax impact on their pension.”