Dear Brother/Sister,

COMMUTATION FACTORS USED IN THE FIREFIGHTERS PENSION SCHEME (FPS)

Over the last few weeks several recently retired members have contacted my office regarding the revised commutation factors that have been adopted for the Firefighters Pension Scheme. While many retired members welcomed the amended factors there have also been a number who felt that the way the amended figures were introduced was unfair and have requested the FBU look into the situation further. This circular aims to explain the steps the FBU is taking in response to the changes made.

The commutation factor is the rate at which pension is converted into a lump sum if a member wants to take part of his or her pension as a tax free lump sum at retirement. For instance, a factor of 15 means that the member will get £15 cash for each £1 of annual pension surrendered. The new factors, which were introduced retrospectively to the FPS with effect from 1st October 2007, are higher than the old ones in every case. The FBU feel that the factors should have been reviewed regularly, as this was the first review since 1998. This issue has been raised previously at Firefighters’ Pension Committee meetings.

The FBU is taking advice from Thompsons on this issue as well as obtaining the expert opinion of an independent actuary. The FBU will be writing to Martin Hill (Firefighters Pension Team) to outline our concerns and issues. The FBU will also be raising this issue at the next meeting of the Firefighters Pension Committee.

Members who have been requesting that the FBU initiate a legal challenge on this issue can be assured that if this is an option with a reasonable prospect of succeeding that will also be investigated.

Officials and members will be informed of any developments, which will also be displayed on the FBU website

Yours in Unity,


SEAN STARBUCK
NATIONAL OFFICER
SS/ba