Police Pension vs Take-Home Pay:
Is It Worth the 13%?
Are police pension contributions too high? We break down the 12–14% deduction, take-home pay impact, long-term value, and the true cost of opting out.
Independent explanatory guidance based on Police Regulations 2003 and the 2015 CARE scheme.
Is the police pension worth the 13% contribution?
Yes — for most officers.
The 2015 CARE Police Pension Scheme remains one of the strongest defined benefit pensions in the UK. While contributions of 12–14% significantly reduce take-home pay, the employer contributes over 30%, and the scheme provides index-linked income for life.
Why the 13% Feels
So Painful
It is not your imagination. The deduction on your payslip is substantial. Police contribution bands are set between 12.44% and 13.78% of pensionable pay.
Unlike private sector "auto-enrolment" pensions (often 3–5%), this takes a huge chunk out of your monthly disposable income.
For a Top Scale Constable earning roughly £48,231, this amounts to over £6,000 per year deducted before tax. Psychologically, seeing £500+ vanish from your payslip every month is difficult.
Monthly Net Pay Impact
Top Scale Constable (Illustrative)
📉 The "Price of Membership" is approx. £370 per month in lost cash flow.
What You Actually
Get For It
Most people compare the police pension to a savings account: "I put in £6,000, so I have £6,000." This is incorrect. You are purchasing a membership to a Defined Benefit scheme.
CARE Accrual (1/55.3)
For every year you work, you bank 1/55.3th of your salary as annual pension. On £48k, that's roughly £870 of permanent annual income secured for life, every single year you contribute.
Index Linking (CPI)
Your banked pension grows with inflation (CPI + 1.25% for active members). It doesn't lose value like cash under a mattress. It is fully protected purchasing power.
Head to Head Comparison
| Feature | Private Sector (DC) | Police Pension (DB) |
|---|---|---|
| Guaranteed Amount? | No (depends on stock market) | Yes (Government backed) |
| Inflation Proof? | Unlikely (Cash erodes) | Yes (CPI Linked) |
| Employer Contribution | 3% - 8% typical | 31% (Hidden Wage) |
| Risk Profile | You take the risk | Govt takes the risk |
3. The "Opt-Out" Trap
"I'll just opt out for a few years to save for a deposit."
This is often the most expensive financial decision of an officer's life. Here represents the stark difference between Cash Flow (today) and Wealth Destruction (forever).
The Cash Flow (What you see)
"I have an extra £370 a month in my pocket."
The Wealth Destruction (Hidden)
- × You lose the employer's £1,000+/month contribution.
- × You lose the £870/year guaranteed life income.
- × You lose Ill-Health retirement cover.
- × You lose the Death in Service grant (3x Salary).
Projection: Opting out for just 5 years could reduce your final retirement pot value by over £100,000 compared to staying in.
4. Cash vs
Wealth
The core tension in policing today is between Solvency (can I pay bills today?) and Wealth (will I be poor when I'm old?).
For officers in Years 1–5, the Financial Pressure Index shows that housing costs and low starting salaries make the pension deduction feel unbearable. This is the danger zone.
"Wealth is built by buying assets. The Police Pension is an asset. Cash is not. If you use pension money to pay rent, you transfer wealth to your landlord. If you keep it, you transfer wealth to your future self."
5. Who Might Consider Opting Out?
We advocate remaining in the scheme. However, independent financial advice sometimes suggests opting out in extreme cases:
Crisis Debt
If you are facing immediate bankruptcy or eviction, cash flow takes priority over future wealth.
LTA Issues
Very high earners (Chief Officers) historically opted out due to tax caps, though rules have evolved.
Short Service
If planning to leave policing within 1-2 years, the administrative value implies a lower return.
Note: If you opt out, have a plan to opt back in. Do not drift.
6. The 30 Year
Projection
What does a full career actually look like in numbers?
To replicate a £28,000 guaranteed index-linked annual income in the private sector, you would typically need a pension savings pot of £700,000 - £1,000,000 depending on annuity rates.
7. Promotion Impact
Be aware: Promotion increases your contribution rate. The "Net Pay Drag" is real, but the pension uplift compensates long-term.
An Inspector earning £60k banks more pension (£1,085/yr) than a Constable earning £48k (£867/yr), despite the higher pain.
8. Real World Breakpoint
At what point does the pension truly start "winning" financially compared to taking the cash?
| Service Length | Status | Verdict |
|---|---|---|
| 0–5 Years | Cash Flow Crisis | Pension feels like a burden. |
| 5–15 Years | Accumulation Phase | Value builds, break-even approaches. |
| 15+ Years | Wealth Acceleration | Pension value exceeds contributions significantly. |
9. Common Myths
Myth: "It's unaffordable."
Reality: It is expensive, but it acts as a forced savings vehicle. Without it, most officers would not save an equivalent amount (approx £1000/mo total value) for retirement.
Myth: "I can invest better myself."
Reality: To beat the police pension, you would need to consistently outperform the market while replacing the missing 31% employer contribution. Very few investors can do this.
Myth: "Employer contribution is fake."
Reality: It is real money paid by the force to the scheme administrator or Treasury. It funds the liability. It is part of your total reward package.
Myth: "I can opt out and rejoin easily."
Reality: You can, but you risk health exclusions on re-entry, and you cannot recover the lost years of accrual.
Frequently Asked Questions
? Is 13% too high for a pension?
While 13% is high compared to the private sector average (often 3-5%), the Police Pension Scheme is a Defined Benefit scheme. The high contribution essentially purchases a guaranteed, inflation-linked income for life, rather than building a pot of money subject to market risk. The employer contributes over 30%, making the 'total' value effectively 45%+ of salary.
? Can I rejoin if I opt out?
Yes, you can usually rejoin. However, rejoining may be subject to health checks (for ill-health benefits), and you cannot 'buy back' the years you missed. During your opt-out period, you lose the employer contribution, the death-in-service grant, and the ill-health retirement protection.
? Does opting out affect ill-health retirement?
Yes, significantly. If you opt out of the pension scheme, you generally lose the enhanced ill-health retirement protections. If you were to be medically retired while opted out, you would not receive the immediate ill-health pension payments that an active member would.
? Is the police pension better than NHS?
The Police Pension Scheme (2015) has a faster accrual rate (1/55.3) than the NHS 2015 Scheme (1/54), but police officers typically retire earlier. Both are excellent public sector defined benefit schemes, but the Police scheme is often considered slightly more generous due to the unique nature of the role and earlier retirement options.
? How much is the police pension worth in real terms?
For a Constable serving a full 35-year career, the pension pot (in transfer value terms) can often exceed £1 million. In terms of income, it provides a guaranteed salary-replacement often worth £25,000–£35,000+ per year (index-linked) plus a tax-free lump sum, which would cost significantly more to purchase as an annuity in the private sector.
The Verdict
For most officers, the police pension is not the problem. The problem is the pressure between years 1–7 of service.
Opting out reduces immediate pain but sacrifices long-term security.
It remains the strongest component of policing’s overall reward structure and arguably the primary reason to stay in the job long-term.
Independent Guidance. Not Financial Advice.
Based on Police Regulations 2003 and the Police Pension Scheme 2015.