Password secret encryption and password policy

[Bambora Info]

I am using either type 8 or 9 encryption i.e.

username demo1 algorithm-type scrypt secret <secret>

However I want to use password policy such a

Spoiler

aaa new-model
aaa common-criteria policy policy1
char-changes 4
max-length 25
min-length 8
numeric-count 2
special-case 1
exit

However these do not go hand in hand.

How can I use encryption as well as a password policy,

[MHM Cisco World]

password policy use only with AAA server as I know you can not use it with local AAA server 
MHM