Firefighters' Pension Scheme Reforms
Following extended constructive discussions with the firefighter unions, the Department for Communities and Local Government has published a Heads of Agreement on the core parameters for reforms to the firefighters’ pension scheme.
The key features of the new scheme, to be introduced in 2015, are being considered by the Executives of the firefighter unions.
Summary of Consultation Responses and Government's Response - March 2014
A summary of responses and the government’s response to the consultation on proposed changes to employee contribution rates from 1 April 2014 in the firefighters’ pension schemes in England.
Equality statement of the increases to contribution rates from 1 April 2014
The equality statement considers the impact of the 2014 to 2015 pension contribution increases on protected groups.
Open Letter to Firefighters - 20 August 2013
Fire Minister, Brandon Lewis MP has issued another open letter to firefighters regarding pension scheme reforms.
With a week to go before the FBU's ballot closes, the letter addresses the three most important points raised by firefighters.
Open Letter to Firefighters - 31 July 2013
Fire Minister, Brandon Lewis MP has issued an open letter to firefighters regarding pension scheme reforms.
The letter also provides links to the following further information:
- Consultation documents seeking views on the proposed terms of the Retained Firefighters’ Pension Settlement to provide eligible retained firefighters with access to a modified pension scheme.
- Pension scheme calculators: the first of which shows the pension available to a firefighter under the terms of the Proposed Final Agreement; the second shows the pension available to a firefighter under the Government's revised offer to the FBU of 19 June.
- Further information - factsheet and Frequently Asked Questions. The FAQs are based on the scheme design as set out in the Proposed Final Agreement.
General Memorandum 092/13
Firefighters’ Pension Scheme Reforms
General Memo 76/13 and 87/13 were recently published providing the proposals for the 2015 Firefighters’ Pension Scheme.
Further information has since been received and can be viewed at the link below.
The core parameters for the new scheme are:
- a career average pension scheme design
- a provisional accrual rate of 1/58.7th (equivalent to around 1.70%) of pensionable earnings each year, subject to further agreement on outstanding issues
- there will be no cap on how much pension can be accrued
- active members’ career average benefits to be revalued in line with average weekly earnings
- pensions in payment and deferred benefits to increase in line with Prices Index (currently Consumer Prices Index)
- average member contributions of 13.2% from April 2015, with protection for new entrants. The Government will review the impact of the proposed 2012-13 contribution changes, including the effect of membership opt-outs, before taking final decisions on how future increases will be delivered in 2013-14 and 2014-15, and in the new scheme
- flexible retirement from the scheme’s minimum pension age of 55, built around the scheme’s Normal Pension Age of 60
- enhanced retirement arrangements for active members who are aged 57 or more
- the Normal Pension Age will be subject to a regular review, which will consider if the Normal Pension Age of 60 remains relevant and will take full account of the economical, efficient and effective management of the fire service including the challenging occupational demands of operational firefighting and the changing profile of the workforce
- members who retire later than the scheme’s Normal Pension Age will have their pension enhanced to recognise that the pension is taken later
- a deferred pension age equal to the individuals’ State Pension Age
- optional lump sum commutation at a rate of 12:1 in accordance with HMRC limits and regulations
- ill-health retirement benefits and all other ancillary benefits to be based on the arrangements in the New Firefighters’ Pension Scheme 2006 (‘the 2006 scheme’)
- an employer cap to provide backstop protection to the taxpayer against unforeseen costs and risks, as well as the chance for members to improve benefits if the costs of the scheme fall below a fixed point. This means that the taxpayer will not be faced with unlimited costs and that members will benefit if the scheme proves to be less expensive than expected; and
- a guarantee that, outside of the scheme designs parameters set out in the Heads of Agreement, there will be no further reform for the next 25 years.
Protection for those close to retirement
- Active scheme members who, as of 1 April 2012, have 10 years or less to their current Normal Pension Age will see no change in when they can retire, nor any decrease in the amount of pension they receive when they choose to retire. The Normal Pension Age in the Firefighters’ Pension Scheme 1992 (‘the 1992 scheme’) is age 55, for the New Firefighters’ Pension Scheme 2006 it is age 60. So this means that anyone who is aged 45 years or over in the 1992 scheme, or aged 50 years or over in the 2006 scheme, will see no change in the age that they expected to be able to take their benefits, nor the amount of pension they receive. Members who qualify for this protection will remain in their current scheme until they retire
- There will also be a further 4 years of tapered protection for scheme members so that members who are up to 14 years from their current Normal Pension Age, as of 1 April 2012, will be eligible for an additional degree of protection, in the form of further accrual in their existing scheme. At the end of the protected period, they will be transferred into the new pension scheme arrangements
- This detailed table sets out an individual members’ entitlement to tapered protection, according to date of birth
Secure accrued rights
All rights accrued under final salary arrangements in the 1992 scheme, or 2006 scheme, will be linked to the members’ final salary when they retire or leave the 2015 pension scheme
For members of the 1992 scheme, the Government will further meet:
- members’ expectation to double accrual for service accrued under the 1992 scheme, so that a members’ full continuous pensionable service upon retirement will be used to calculate an averaged accrual rate up to a maximum accrual rate of 1/45ths.
- members’ expectation to be able to access their 1992 scheme benefits, when they retire, from age 50 with 25 or more years pensionable service. Pensionable service for the purpose of calculating access to the pension will include any continuous pensionable service accrued under both the 1992 scheme and the 2015 scheme
- members’ expectation to an actuarially assessed commutation factor for benefits accrued under the 1992 scheme