TO: RETIRED AND OUT OF TRADE MEMBERS
Dear Brother/Sister,
IMPORTANT INFORMATION THAT CAN AVOID DETRIMENTAL RETROSPECTIVE CHANGES TO FIREFIGHTERS’ PENSIONS IN ENGLAND
Please read the following information which will also be placed on the FBU website for the attention of Retired and Out Of Trade (ROOT) FBU members. If you have a network of ROOT members please use that to communicate this circular.
It is often assumed that amendments cannot be made to the Firefighters’ Pension Schemes if they would worsen the position of members who have already retired or left the fire and rescue service. In fact that is not the case, but pensioners and deferred pensioners (i.e. members who have left but are not yet receiving a pension) can protect their position if they write to their former Fire and Rescue Authority.
This has become an issue for members of the firefighters’ pension schemes because two Amendment Orders were made last year, which amend the rules of the Firefighters’ Pension Scheme (FPS) and the rules of the New Firefighters’ Pension Scheme (NFPS). These amendments may worsen the position of some pensioners and deferred pensioners. If you think you may be affected you need to write to your former Fire and Rescue Authority.
What has changed?
The Orders referred to above made a long list of changes to the Firefighters’ Pension Scheme (FPS) called the Firefighters’ Pension Scheme (Amendment) (No. 2) (England) Order 2013. A parallel Order was made to make some of the same changes to the New Firefighters’ Pension Scheme (NFPS), confusingly called the Firefighters’ Pension Scheme (England) (Amendment) (No. 2) Order 2013. The changes which might have a detrimental impact on pensioners and deferred pensioners are set out below.
The two Orders only apply to firefighters whose last employer was an English Fire and Rescue Authority. Similar Orders are likely to be made in Northern Ireland, Scotland and Wales in due course.
The changes affect members who are still contributing to the FPS or the NFPS, and also to members who have already retired or left the fire and rescue service. The only members who can protect their position from the effects described below are members who retired or left before 1 July 2013. These changes affect all other members too, but the law does not give them the same right to protection.
Changes that affect members of the FPS only
1. Abatement
Under the FPS and the NFPS, a member is able to retire and draw their pension and pension lump sum, and then return to work with the same or another Fire and Rescue Authority. Until the rules were amended by the Amendment Order, their pension was liable to be reduced or “abated”, but only if they returned to work for a Fire and Rescue Authority as a regular firefighter. Abatement means that the pension is reduced to the extent that their new salary, added to their pension, does not exceed the salary of their pre-retirement job. If the member is a member of the NFPS, this abatement rule also applies if the new job is any job with a Fire and Rescue Authority.
The amendment to the FPS means that this principle of abatement will apply if a member takes their pension and pension lump sum, and then returns to any employment with any Fire and Rescue Authority in any capacity. In other words, their position is now the same as a member of the NFPS.
That means that members of the FPS are placed in a worse position than before: they cannot return to work in any job with a Fire and Rescue Authority without risking abatement. That includes working as a retained firefighter.
Moreover, this change is stated to have retrospective effect to 25 September 2009. This means that anyone who is already receiving an FPS pension, and who has already taken up work as a retained firefighter or work in a non-Grey Book job with a Fire and Rescue Authority, is now at risk of having their pension abated.
- If you are a pensioner member of the FPS and you have returned to work with a Fire and Rescue Authority as a retained firefighter or in a non-Grey Book job, you need to write to the authority in order to protect your position.
- If you are a pensioner member or a deferred pensioner member and you think you may one day return to the fire and rescue service as a retained firefighter or in a non-Grey Book job you are also potentially affected, and you too should write to protect your position
2. Deferred pensions: early payment on ill-health grounds
If you leave the fire and rescue service before reaching your normal pension age, you cannot normally draw your pension until you reach the Scheme’s deferred pension age. In the FPS that is age 60.
It is possible to draw your deferred pension before reaching age 60 if the reason for doing so is the state of your health. In the FPS, a deferred pensioner is entitled to early payment if he or she is permanently disabled to the extent that he or she would not be able to perform the duties of his or her former role. In the NFPS the barrier is higher: the member must be permanently disabled from undertaking any employment.
Under the Amendment Order that applies to the FPS, the barrier has been raised to the same level as already exists under the NFPS. If you are a deferred pensioner member of the FPS, in the future you will not be able to draw your pension before age 60 unless you are not capable of performing any employment. If you were a deferred pensioner, and you are now getting your pension because you are not capable of working as a firefighter, your pension may now be reviewed against the new higher threshold and your pension might be terminated.
- If you are a deferred member of the FPS, and if you are suffering from ill-health or think you may suffer from ill-health before reaching age 60 that might permanently affect your ability to work, you should write to your former Fire and Rescue Authority to protect your position.
- If you are already receiving your pension and the reason is that you were a deferred pensioner but your pension has been paid early because of the state of your health, you are also affected and you should write to protect your position.
Members of the FPS and members of the NFPS
3. Additional Pension Benefits (APBs) for continual professional development and long service increments
The basis on which continual professional development (CPD) and long service increment (LSI) payments are counted as pensionable is complex. In short, an amount of pension is awarded for any LSI you were receiving before it was scrapped, and for any CPD payments you receive each year. Each year’s payments are taken on their own: CPD and LSI do not form part of the final salary that is used to calculate your pension. These additional annual blocks of pension are called “additional pension benefits” or APBs. The amount of APB earned each year is increased in line with inflation until you retire, at which point the APBs, as increased, are paid at the same time as your main pension.
Until recently, the inflation measure used to uprate APBs was the increase in the retail prices index (RPI). Under the Amendment Orders, the index used will be the consumer prices index (CPI), and CPI increases are generally lower than the RPI.
This change also has retrospective effect, so that the indexation uplifts added in the tax years 2010/11, 2011/12 and 2012/13 have been changed to the CPI. The increase in the RPI was higher than the increase in the CPI in each of these three years.
- If you are a pensioner who retired after 11 April 2011 and received APBs in any of the years 2010 – 2013, you need to write to protect your position.
- If you are a deferred member and will receive APBs for these years when you draw your pension, you also need to write to protect your position.
What to do next
If you think you may be affected by these changes you should treat these issues as urgent. You must write to your former Fire and Rescue Authority before 30 September 2014 to protect your position.
A draft letter is attached which you can use. Send it to your former Fire and Rescue Authority. Don’t forget to date the letter, and please ensure that you keep a copy for your records.
Yours in Unity,
SEAN STARBUCK
National Officer
You can find a template letter attached.
