Report - Fire Brigades Union

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SECTION D — PENSIONS On 8 December 2010 the FBU received a letter from the Pensions Ombudsman which included the provisional findings in relation to the three points of contention raised by GAD. Changes to pension tax relief Government proposed changes to tax relief on pension contributions which if implemented were likely to affect a wide number of FBU members. Initial consultation ended on 27 August 2010 and circular 2010HOC0533MW outlined those likely to be affected and informed members that the FBU had submitted a response to these proposals. A bulletin simplifying the changes and giving examples of the way this proposal could affect members was posted on the FBU website. This bulletin also urged members to email or write to their MP asking them to oppose this proposal. This issue was also raised at the Firefighters’ Pension Committee and a response was submitted that took account of many of the concerns of the attendees. In October HM Treasury issued a summary of the responses and detailed the next steps. On 14 October 2010 circular 2010HOC0645SS, which explained the government changes to pension tax relief, was circulated. It highlighted that these changes were not as severe as those initially proposed and further consultations were expected on options for flexibility over payment of charges. The issue was discussed further at the Firefighters’ Pension Committee and a further paper FPC (10)13 which raised the issue of ill health and redundancy was distributed. Changes to pension indexation In June 2010 the Chancellor of the Exchequer announced that for future pension increases the measure of inflation figure would be the Consumer Price Index (CPI) instead of the Retail Price Index (RPI). This announcement was confirmed in Firefighters’ Pension Scheme circular 4/2010 issued on 7 July 2010. This had the obvious potential to devalue the future pension uprating and the FBU immediately looked into a possible challenge to this position. Initial legal opinion was sought and a report was presented to the executive council at the meeting held on 7, 8 and 9 December 2010. The executive council discussed the report and agreed to seek further legal advice before any final decision on a challenge is taken. Pensionable pay The department for Communities and Local Government (CLG) issued a Firefighters’ Pension Scheme circular (11/2009) which requested responses from stakeholders on the issue of pensionable pay. The FBU responded and raised concerns with how some elements of pay were being treated inconsistently with regard to their pensionability. CLG suggested several options including a suggestion that payments such as London Weighting Allowance and Flexible Duty Allowance should not be pensionable in the same form as they currently are. CLG attempted to debate this issue at the Firefighters’ Pension Committee held on 15 March 2010 but the FBU objected to the discussion being held in this forum as it was an issue of a contractual nature and must therefore be only discussed at the National Joint Council (NJC). Following this opposition the paper was withdrawn and CLG informed the committee that the proposals would not be actioned at this stage. Apportionment On 13 August 2010 circular 2010HOC0501SS was issued giving advice to officials representing members in the Firefighters’ Pension Scheme (FPS) on rule K reviews. This advice was issued to clarify the position on when apportionment could be applied and to give details of a test case that the FBU were running where an authority was dealing with a review contrary to the guidance on how they should be applied. On 4 October 2010 an update on the test case was given in circular 2010HOC0626SS and clarified that CLG had conceded that on a K2 review apportionment cannot be applied to factors that were available at the time of the original decision. Simplified this meant that unless apportionment was used at the initial assessment by the Independent Qualified Medical Practitioners (IQMPs) it could not be introduced at subsequent K2 reviews. Update guidance for officials dealing with ill-health retirements On 12 August 2010 head office facilitated a medical appeal update for regional/sectional pension co-ordinators. This update focussed upon the new guidance for Independent Qualified Medical Practitioners (IQMPs) issued by CLG in July 2009. On 25 August 2010 circular 2010HOC0527SS was issued to outline the full process and to illustrate the changes to the process to all officials. This document highlighted the main stages involved in both medical and non-medical issues and requested that officials used the ideas contained in the attached model letter to ensure that they had early involvement with any ill-health retirement situations. On 21 September 2010 circular 2010HOC0596SS was issued to remind officials of the importance of securing early involvement in ill-health cases and to inform of a course that will be run in 2011 designed to outline the pre- and post-IQMP process. Age discrimination Circular 2010HOC0192MW issued on 22 March 2010 informed members that CLG had taken legal advice following a challenge raised on potential age discrimination concerning firefighters who were employed and joined the Firefighters’ Pension Scheme (FPS) age 18-20 years old and that they would not be defending their position legally. The remedy to the position was that anyone who joined the FPS age 18-20 will not be required to pay pension contributions from the point at which they reach 30 years’ reckonable service until the point they reach age 50. At age 50 the individual can retire and receive a pension or resume making pension contributions. The entitlement would be backdated until 1 December 2006 92 FBU Annual Report 2011
SECTION D — PENSIONS when the age discrimination regulations came into effect and a refund of contributions would be made to affected members. CLG confirmed this position would require a change to rule G2 of the FPS and that following ministerial approval this would be enacted. This was later confirmed in Firefighter Pension Scheme circular 3/2010 issued on 21 June 2010. Implications for re-employment of Firefighters’ Pension Scheme pensioners from 6 April 2010 On 9 March 2010 circular 2010HOC0158SS explaining the new tax rules that took effect from 6 April 2010 regarding members who retire under rule covering the protected pension age was issued. This circular included a guidance note(1/2004) that outlined that the new rule relates to the Finance Act 2004, whereby the minimum pension age (MPA) rose to age 55 from 6 April 2010. Members of the Firefighters’ Pension Scheme 1992 retained a right to retire from age 50 (provided they have 25 or more years of pensionable service). This right to retire at an age below 55 was protected and on retirement members receive a protected pension age (PPA). (HM Revenue and Customs took the view that this protection does not extend to chief fire officers appointed on or before 5 April 2006). The guidance note brought to the attention of fire and rescue authorities (FRAs) the tax rules that will be applied from 6 April 2010, where an individual who has taken pension benefits from the FPS takes up employment again. It explained that from 6 April 2010, an individual who retires with a PPA and who subsequently takes up employment will lose that protection if they are employed by one of the following employers and one of the four employment conditions listed was not met: 1. an employer who employed the individual in the six months before benefit entitlement arose, and who was also a sponsoring employer in the scheme under which benefit entitlement arose in that six-month period; 2. any person connected with the employer described in the previous paragraph. Note that under this condition the person employing the individual does not need to be a sponsoring employer; 3. any sponsoring employer in the pension scheme under which benefit entitlement arose that is connected with the individual. Therefore, from 6 April 2010 an individual who has retired with a PPA and was subsequently re-employed by a FRA before they have reached age 55 would incur additional tax charges on all pension benefits, including any commuted lump sum, paid to them before reaching age 55 unless one of the following four re-employment conditions is met: 1. recall by the armed forces; 2. a break in employment of at least six months; 3. a break in employment of at least one month and benefits may be abated; 4. a break in employment of at least one month and the re-employment is materially different. The guidance note issued on 26 January 2010 also explained the discretion available to employers on abatement and gave a definition of what is meant by the term “materially different”. Abatement and re-employment In line with annual conference 2009 resolution 35, work was undertaken to evaluate the continued policy on pension abatement and if necessary produce an alternative position. A report was submitted to the executive council for its meeting held on 8, 9 and 10 February (2010HOC0113SS) following which an executive council policy statement – Pension abatement and re-employment – was prepared for annual conference 2010. After being debated the statement received the support of annual conference and became FBU policy. Local government pension scheme – fact not fiction In response to media stories that public sector pension scheme costs are spiralling out of control, the FBU, along with other unions, produced documents aimed at giving a more balanced view on the situation. These documents (Mythbusting guide; Ten key facts; The truth about the LGPS; LPGS – the economics; What politicians say about the LGPS) were explained in circular 2010HOC0247SS and were distributed to FBU members to enable them to correct the inaccuracies and give an informed opinion when speaking to members of the public and media. Scheme valuations A special meeting of the Firefighters’ Pension Committee was held on 11 January 2010 to discuss the actuarial valuations of the firefighters’ pension schemes as at 31 March 2007. At this meeting CLG raised issues around the future affordability and sustainability of the firefighters’ pension schemes and drew attention to the fact that the Government Actuary’s Department (GAD) had suggested that factors such as increased longevity for pensioners would have a dramatic effect upon the future cost of the schemes. The FBU raised several issues around savings that had already been made and that these had yet to be realised. CLG outlined that other public sector pensions had already looked at cost sharing options such as “cap and share” and that they may have to be considered in more detail in the very near future for the firefighters’ pension schemes. The next valuation of the firefighters’ pension schemes (FPS and NFPS) is due to take place in 2011. CLG suggested that a future paper, Options for the Future, be prepared for a subsequent meeting of the Firefighters’ Pension Committee. Options for the Future Circular 2010HOC0192MW, issued on 22 March 2010, reported to members that at the Firefighters’ Pension Committee held on 15 March 2010 four papers were presented by CLG which FBU Annual Report 2011 93
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The Fire Brigades Union Executive C
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MICK SHAW President MATT WRACK Gene
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Section D Pensions 91 Section E AIF
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