PART ONE Item 11

To: SURREY POLICE AUTHORITY

Date: 13 September 2006

By: Alison Bennett

Title: Protocol for the Review of Injury Awards

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Purpose of Report/Issue:

Attached to this report is a draft protocol drawn up by the Pensions Board on the review of injury awards. The protocol has been approved by the HR Panel at its meeting on 7 July and subsequently issued for consultation. The report is now before the Authority for approval.

Background:

Officers who are injured in the course of duty are entitled to receive an injury award (as well as a pension) which compensates them for loss of earnings during their working life. Authorities are expected to review the injury award throughout the officer's working life every five years; at police retirement age; and at state pension retirement age.

The attached protocol (Annex A) has been developed by the Pensions Board to implement the review at police retirement age and at state retirement age. It is not the intention of the protocol that any officer should be in financial difficulties as result of the review. However, it is clear that there are some anomalies within the current system and that there are substantial savings (c£100k per annum) which might be made if awards were reviewed regularly at state retirement age. Some examples are attached at Annex B.

The benefits and disbenefits of reviewing the award at police retirement age are more evenly balanced. Members should also note that any appeal made by the officer must be paid for by the Authority and this is likely to be c£7k per appeal, which would reduce the financial savings to be made.

However, the rationale for the protocol is not purely financial. The main aim is to ensure that officers who are injured in their working life as police officers are not financially worse off as a result of their injury but, equally, an officer who has worked throughout their career without injury should not be financially disadvantaged.

The recommendation of the Pensions Board and HR Panel is that the protocol should be implemented but that, initially, the focus should be on reviewing the awards of officers at state retirement age.

Consultation

Following approval by the HR Panel, the protocol was issued for consultation to the Police Federation and National Association of Retired Police Officers. The Pensions Board has taken on board the responses received. The main concern of the Federation was the switch to using the National Average Earnings index when calculating the award as these vary from month to month. The Board felt that this risk had to be accepted but each case would be assessed individually and the Board was willing to apply discretion when making the award. The protocol offers reassurance that individual circumstances would be considered in each case.

Recommendation

Members are asked to agree that

ii) the process of review of the protocol be overseen by the Pensions Board.

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Contact details

Name: Alison Bennett

Job Title: Policy Officer

Telephone number: 01483 482151

Email address: bennett11786@surrey.pnn.police.uk

Annex A

SURREY POLICE AUTHORITY AND SURREY POLICE

REVIEW OF INJURY AWARDS - POLICE PENSION REGULATIONS 1987

Purpose of policy

This paper outlines a process for handling cases when a pensioner is in receipt of an injury award under the Police Pension Regulations 1987.

Background

The purpose of an injury award is to compensate an officer for lost earnings capacity as a result of a work-related injury. Officers who are injured in the course of their duty can be retired early on grounds of ill-health and may then also be entitled to payment of injury benefits to compensate them for their reduced earning capacity.

Injured or disabled pensioners are entitled to be compensated for their reduced earning capacity during their working life. Guidance from the Home Office requires that the award is reviewed:

(These reviews do not affect the payment of the ill-health pension, which is not related to compensation for lost earning capacity).

Principles

Surrey Police Authority and Surrey Police wish to take a consistent approach to reviews and to ensure that it takes a fair and balanced approach to each case, based on the same guiding principles. Each case will be different and therefore will need to be dealt with individually on a case by case basis, utilising all available and relevant information. However, the purpose of the review of the award should be to ensure a fairer and more cohesive approach to the payment of injury benefits to ill-health retired Surrey Police pensioners.

Decisions taken under this policy must comply with the requirements of natural justice and the Human Rights Act.

Responsibilities

It is the responsibility of the police authority to decide in the first instance whether an officer and his/her dependants are entitled to an injury award. It is also the responsibility of the authority to review the award from time to time.

Responsibility for reviewing the awards has been delegated by Surrey Police Authority to the Director of Human Resources. The Pensions Board, which reports to Surrey Police Authority's Human Resources Panel, has been set up to support the DHR in making decisions about whether to seek a review of an injury award.

The Force Medical Officer, who acts as the Selected Medical Practitioner, is required to make the final decision about the review and to sign a certificate.

Reviews throughout an officer's career

Currently all injury reviews are carried out at intervals of not more than 5 years. They are referred to the SMP by the DHR on behalf of the Authority.

The power to authorise a change of payment band resulting from an adjustment in the percentage disablement certified by the SMP has been delegated by the Authority to the DHR.

Until normal retirement age the percentage loss is related to the pensioner's police salary. The degree of disablement determines the amount of award paid to the officer as compensation for lost earnings as set out in the Schedule to the Police Pension Regulations 1987. The degree of disablement is set by a medical officer (SMP).

Review at police retirement age

When an officer who is disabled through injury has left the Force, Home Office guidance suggests that the injury award should be reviewed at the time when an officer would normally have been compulsorily retired from the police service. His/her compulsory retirement age is determined by the officer's rank at the point of leaving the service. At the moment, the compulsory retirement ages for officers set out in Police Regulations are:

The compulsory retirement ages under the new pension scheme which takes effect on 6th April 2006 have not changed but the Home Office has indicated that these may be reviewed before the end of 2006.

The basis for calculating the injury award at compulsory retirement age should be the National Average Earnings index at the time of the review. This is instead of the previous calculation based on the former officer's police pay scale as the basis of his or her pre-injury earning capacity had there been no injury. The use of the NAE is recommended by the Home Office as the average for the population overall. Its use puts pensioners on the same financial footing as others in the employment market at a time when they would no longer be able to earn a police salary.

The SMP will be required to assess the loss of earning capacity for the purpose of establishing Degree of Disablement by reference to the % proportion the person's actual earning capacity bears to the NAE. Home Office advice is that separate figures for males and females and for regional fluctuations should not be considered.

The officer will be notified of the intention to review the award and will be given four weeks in which to give notice of appeal as set out in the Regulations.

The SMP will be required to set out his findings in the usual way on the H1 certificate. The power to accept the recommendation is delegated to the DHR.

Review of awards for pensioners over 65

At age 65, a further review of the award paid to injured pensioner is triggered. At this stage, officers will have reached the State Retirement Pension Age irrespective of whether they are male or female or of any other work they have undertaken since retiring from the police service and will be in receipt of the old-aged pension.

Unless there are strong reasons to the contrary, the Home Office recommends that the officer be placed at the lowest band of the Degree of Disablement. This is on the grounds that the former officer will be receiving the State Retirement Pension and should not be disadvantaged financially and that they would no longer be expected to be earning a salary in the employment market.

The Pensions Board should consider the matter and decide whether to refer it to the SMP for review or whether the case is one where review is not necessary. Where the case is for review, the pensioner should be invited to comment on whether there are any mitigating circumstances as to why the reduction should not take place.

The Pensions Board will refer the matter to the SMP who will complete the prescribed H1 certificate, which is then supplied to the pensioner by the Authority within 7 days.

The pensioner has 28 days in which to lodge an appeal in the normal way.

There will not normally be a review after the age of 65.

Scope to recommend no further reviews

Where there has been a significant injury which, in the view of the DHR and SMP means that further reviews would not be warranted, the DHR is entitled to make this recommendation to the Pensions Board for its consideration.

The Pensions Board is likely to agree that there should be no reduction in award or further review of award where

The Director of HR should also make a recommendation to the Board as to whether a further review at age 65 should take place or not, on the basis of individual circumstances. For example, where an award was already small, the Board has the discretion to dispense with any further reviews.

All other awards would be subject to review.

Right of appeal

The pensioner has the right of appeal against the SMP's decision to the Home Office. The cost of the appeal must be borne by the Authority/Force.

The Authority and the Force have no right of appeal against the decision of the SMP.

Review of policy

The policy will be reviewed annually.

ANNEX B: SOME EXAMPLES

On the most recently available figures, there are some 207 police pensioners in receipt of Injury Awards.

Injury awards are paid to those who have suffered an injury in the course of their duty - as defined by the Regulations (includes travel to and from work) - and is in addition to the Ill Health Pension.

The award is calculated according to years of service and degree of disablement. The amount calculated as the injury award is reduced by 75% of the Ill Health Pension payable at commencement, and is therefore loaded to take account of short service, which in turn would mean that any reduction in the Injury award in later life is particularly hard on pensioners injured when young in service.

Less than 10% of awards are in the lowest banding, which means that in the longer term, if implemented, the circular would result in substantial savings.

The actual percentage award only places the award within a band:

0 - 25% Slight

26 - 50% Minor

51 - 75% Major

76% & above Very severe

A

In receipt of 30 year ill health pension, plus Injury award for a heart condition (due to stress of policing).

Currently over 65, has 51% injury award.

A review at age 65, in line with the circular reducing to lowest band would result in a reduction of some £400, but this would be totally offset by the payment of State Pension.

Summary - Draws full police pension plus Injury award. Loss appx £400 pm offset in total by SRP. Saving to Auth £4800 pa

B

Severely injured when young in service. Loss of limb.

Has small ill health pension plus 76% Injury Award.

Implementation of circular at ordinary or state retirement age would result in hardship. But as the disability cannot be recovered from, Authority likely to take the view that no further reviews needed.

C

Suffered serious injury when very young in service; Has small ill health pension plus 65% Injury Award.

Implementation of circular at ordinary or state retirement age would result in hardship.

A suitable case for the Authority to state no further reviews, the disability can not be recovered from.

D

Served full 30 years and has full police pension. Claimed injury award on retirement and given 85% disability award. Now 75 years old, drawing full pension and a yearly Injury Award of over £7000.

If the circular was implemented, all the Injury Award would be lost.

Summary - In receipt of Full Police pension, Injury Award and SRP. Saving to Authority £7000 pa

E

Retired on ill health and a 50% injury award after some 25 years service.

The use of the AEI may result in a one band reduction in injury award and a small loss of income from the Injury award.

Summary - Draws ill health pension. Small loss 55 to 65, Loss when 65 offset by SRP, no hardship. Saving to Authority some £4000 pa

SRP = State retirement pension

AB August 2006