New pension costs could see police run out of cash, PCC warns

Costs: New pension commitment could see police cash reserves drained away
Costs: New pension commitment could see police cash reserves drained away

It is feared police forces nationally could have to raid their cash reserve ‘bank account’ to meet a looming new pensions bill in a situation which could throw many into crisis during the years ahead.

Government actuaries – who calculate the demand of meeting pension commitments – have recently announced surprise figures which show a shortfall in police pensions which, at present, it appears each force will have to shoulder.

The payments will be stepped and, unless changes are made, it means South Yorkshire Police will face an unexpected bill of more than £3m next year, rising to more than £8m in the following 12 months, with the increased commitment following in future years.

South Yorkshire’s Police and Crime Commissioner, Dr Alan Billings, said the only source of money to foot that bill would be from savings, called reserves, which are there to meet unexpected emergencies.

He believes that situation will be repeated in forces across the country and, without intervention, a crisis will emerge as each spends its savings to meet increased pension bills.

In South Yorkshire, next year’s £3.6m cost would come from reserves “if it is not covered by the Government”, he said.

“If it comes from reserves, that is a finite amount of money and police forces will start to run out of reserves,” he said.

“It won’t happen at one go, but it will happen across the country.

Different police forces have different levels of reserves – some substantially above the recommended five per cent of the annual budget – but in South Yorkshire there are already pending demands on that cash, with civil settlements over the Hillsborough disaster and the Rotherham child sexual abuse scandal due to be completed in the next few years.