Dear Brother/Sister
Members who have transferred from RDS to whole-time employment:
Pension benefits for those expected to reach 20 years’ combined RDS and whole-time service before age 55
This circular concerns an issue that arose in the negotiations for the conclusion of the RDS pension claims which potentially affects those who have transferred from RDS to whole-time employment. As reported separately, the negotiations for the resolution of those claims have been concluded successfully, and a Memorandum of Understanding has been entered into with the Home Office. However, the issue relating to transfers from RDS to whole-time employment remains to be resolved. This, and the steps members are recommended to take, are set out below.
Introduction
The issue identified is likely to apply in the main to members who transferred from RDS to whole-time employment before 6 April 2006. But it could also arise for those who transferred from RDS to whole-time employment after that date. It only applies to RDS members who joined the fire and rescue service before 6 April 2006.
The issue relates to the different ways retirement benefits are calculated under the Firefighters Pension Scheme 1992 (‘FPS’) and the New Firefighters Pension Scheme 2006 (‘NFPS’). Whole-time firefighters were able to join the FPS until 6 April 2006. RDS firefighters have been able to join the NFPS for employment from 6 April 2006. RDS firefighters who were employed before 6 April 2006 have been able, under the so-called ‘first options exercise’, to take up ‘special category’ membership of the NFPS for employment between 1 July 2000 and 6 April 2006. This is sometimes referred to as membership of the “Modified Section” of the NFPS.
Different benefit structures under the FPS and NFPS
Under the terms of the Memorandum of Understanding agreed with the Home Office and employers, the remedy to be provided to all pre-6 April 2006 RDS firefighters under the ‘second options exercise’ being considered for resolution of the RDS pension claims will be through special category membership of the NFPS for periods of employment before 1 July 2000 (and, in some cases, for periods of employment between 1 July 2000 and 6 April 2006).
The differences between the benefit structures of the FPS and the Modified Section of the NFPS relevant to this Circular are as follows:
- The FPS nominally has a Normal Retirement Age (‘NRA’) of 55. In fact, members can take their pension from age 50, provided they have accrued 25 years’ pensionable service. This means that the NRA for members is between age 50 and 55 – that is their age after 50 when they reach 25 years’ service. The Modified Section of the NFPS has an NRA of 55 for special members;
and
- The Modified Section of the NFPS provides for an accrual rate of 1/45th of pensionable pay per year of pensionable service. The FPS provides for an ordinary accrual rate of 1/60th of pensionable pay per year of pensionable service and ‘fast accrual’ after 20 years’ pensionable service – i.e. each year of service after 20 years of pensionable service counts as two years of pensionable service, meaning that the annual accrual rate for each year after 20 years’ pensionable service is 1/30th. The Modified Section of the NFPS does not provide for fast accrual.
Members who took up whole-time employment before 6 April 2006 will have joined the FPS for their subsequent whole-time employment. After the first and second options exercises, they will also be members of the Modified Section of the NFPS in respect of their RDS employment.
Those members will have pensions in two different places. But, as matters stand, they wouldn’t be able to count their NFPS employment towards entitlements in the FPS to (i) retirement from age 50 (after 25 years’ service); and (ii) fast accrual (after 20 years’ service). They will therefore be disadvantaged in comparison to a colleague with the same dates of employment, but whose employment is exclusively whole-time.
These issues arise now because of the additional periods of RDS employment which could be counted as pensionable under the second options exercise. Similar issues might also arise for those who took up whole-time employment after 6 April 2006 and joined the NFPS, but also had periods of RDS service before 2006 (with no break, or a break of no more than six months, between RDS and whole-time employment).
The FBU therefore intends to take steps to protect the position of members in relation to this potential disadvantage arising out of the differences between the pension schemes, pending further negotiations on the issue. This can only be achieved by ensuring that a member who may be disadvantaged initiates an Employment Tribunal claim either during their employment, or within three months of the end of their employment.
For this purpose, members who may be affected by this possible disadvantage are invited to complete and submit the questionnaire on the FBU’s website at https://www.fbu.org.uk/retained-duty-system-firefighter-pension-claims.
Note, however, that this invitation only applies to members who: became RDS firefighters before 6 April 2006; (ii) transferred from RDS to whole-time employment; and who (iii) may be affected by the potential disadvantage identified. Such members are only likely to be affected by the disadvantage if they expect to reach 20 years’ aggregated RDS and whole-time employment before they reach age 55, and their circumstances match one of the categories described below.
For the purpose of calculating aggregate service, RDS employment will count as a proportion of whole-time employment. How you calculate the proportion is explained in the annex to this circular. Please read it before completing the questionnaire.
The FBU therefore invites members to complete the online questionnaire who satisfy the following characteristics:
- Members who were:
- employed on the Retained Duty System before 6 April 2006; and
- who (a) within six months of leaving RDS employment; and (b) before 6 April 2006, took up whole-time employment and joined the FPS; and
- for whom the sum of (a) RDS service expressed as a proportion of whole-time service* and (b) whole-time service, will reach at least 20 years before the member reaches age 55.
OR
- Members who were :
- employed on the Retained Duty System before 6 April 2006 and
- who (a) within six months of leaving RDS employment; and (b) after 6 April 2006, took up whole-time employment, and
- joined the NFPS in respect of their whole-time employment and
- who also took up membership of the NFPS in respect of their RDS employment under the first options exercise and
- for whom the sum of (a) RDS service expressed as a proportion of whole-time employment* and (b) whole-time employment, will reach at least 20 years before the member reaches age 55.
For both categories, members do not need to have reached 20 years’ employment in respect of aggregated RDS and whole-time employment already. Members are invited to come forward who will reach 20 years’ aggregated RDS and whole-time employment by the time they reach age 55.
* For this purpose, use the annex to work out approximately what your RDS service counts as.
Any member who believes that they may come within either category is invited to complete the online questionnaire at: https://www.fbu.org.uk/retained-duty-system-firefighter-pension-claims.
At the same time as completing the questionnaire, members in either category are also asked to have available, so far as possible, their pension statements and pay slips covering their whole-time and RDS employment. If members took part in the first options exercise, please could they also have available the pension’s statement they will have received at the time from their FRS setting out the benefits to which they would be entitled. Please do not send these documents to us at this stage. We will ask you for them when they are needed.
Yours in unity.
Mark Rowe
National Officer
CALCULATING RETAINED DUTY SYSTEM PENSIONABLE SERVICE
When calculating the pensionable service of a retained firefighter, the starting point is to recognise two important points.
- Pensionable service is not the same thing as “service” measured in calendar years. A person may have worked as a retained firefighter for 20 years, but because they work part-time, one years’ service will count as less than a year’s pensionable service.
To illustrate the point in a more ordinary case of part-time employment: if a person works half-time for a calendar year, their pensionable service for that year counts as six months. That is what you would expect: they get half of the pay of a full-time employee in that year, and build up half of the pension.
- Working out the part-time service of a retained firefighter in days and months would be an immensely complicated process if it meant adding up the hours and fractions of an hour spent on drill nights, answering call-outs etc. To avoid that, the rules use the pay you earn as a proxy for the time you spent as a retained firefighter.
For example, if in any given year, if you earned half the pay of a whole-time firefighter, that year counts as six months’ pensionable service no matter how many hours you actually spent attending at the station or answering call-outs.
This also has the advantage of including your retainer in the calculation of your pensionable service. If pensionable service were counted in hours and minutes the retaining fee would not count for anything. You get the retainer without spending any time on duty at all.
So the basic idea is to compare what you earn as a retained firefighter with what an equivalent whole-time firefighter earns. The calculation is done annually.
To perform the calculation in your case, you will need to know what an equivalent whole-time firefighter earned. The pay-scales are on the FBU website and you will find them at https://www.fbu.org.uk/pay-rates?keys=&page=0. They only go back to 2004/2005. For earlier years make some approximations.
For these purposes: if you work as a whole-time firefighter and also as a retained firefighter, ignore your whole-time service and whole-time pay.
For example:
- In July 2004 to July 2005 the pay of a competent firefighter was £25,000.
You were a competent firefighter working the retained duty system and in that year you earned £7,000.
In that year the amount of pensionable service you built up was 7,000/25,000 of a year: that is 0.28 of a year or a little over 102 days.
- In July 2005 to July 2006 the pay of a competent firefighter was £25,850 and in that year you earned £8,000.
In that year the amount of pensionable service you built up was 8,000/25,850 of a year: that is 0.309 of a year or a little under 113 days.
