Submitted by SWFBU on
TO: ALL MEMBERS
Dear Brother/Sister,
RDS MODIFIED SCHEME – DEFINITELY A SCHEME WORTH FIGHTING FOR
On 1 August 2013 Head Office issued a circular (HOC0424MW) which highlighted that, after a long delay and extreme pressure from the FBU, the consultation paper for the RDS ‘Modified’ scheme had been issued.
The consultation period runs from 23 July until 3 September 2013 which will be followed by the laying of the necessary legislation. Currently this consultation applies to England only although we fully expect it to be replicated throughout the UK.
We have been engaged in negotiations for some considerable time with the Department for Communities and Local Government (CLG) in relation to the Retained Modified Scheme. It is worth noting that the FBU is the only staff organisation that has been involved in these negotiations. Other organisations may attempt to claim some credit for this but that is simply not the case.
These negotiations concluded a significant while ago but CLG have delayed issuing the consultation document despite repeated assurances that it would be issued shortly. After significant pressure from the union, which included adding it to the latest trade dispute, the consultation document has been released
This note sets out the proposals for the ‘Modified’ scheme which is available to RDS firefighters who were employed by FRA’s between 1 July 2000 and 5 April 2006. It gives some detail on the proposed new terms that were negotiated by the FBU and the Department for Communities and Local Government over a period following our successful legal challenge.
It is important that you are fully aware of the benefits of the scheme and also the ways in which you can pay the backdated contributions. The repayment options were agreed between the FBU and CLG following a series of meetings and should make it significantly easier and more affordable for you to join.
While many of you will immediately see the value of this scheme, it is vital that you also recognise that, even before it is formally introduced, it is being attacked by the government’s pension proposals in exactly the same way that the 1992 and 2006 schemes are. All members should recognise that this is another Firefighter Pension Scheme that the FBU is trying to defend and must be reminded of the importance of supporting our campaign.
Access to the modified scheme will mean different things to different people and some members will not immediately understand how it impacts upon them. There may be individuals who do not realise that they can benefit from being a member of the modified scheme.
For example a retained firefighter who retired on ill health but couldn’t access an ill health pension because it was not an on duty injury could now be eligible for an ill health pension immediately on joining the modified. This could in effect mean buying into the scheme to immediately receive an ill health pension, which could be worth more than the cost of joining.
There will be other anomalies that come to light as the scheme is introduced. This note is only an initial look at some of the elements of the scheme. It is a work in progress and may be added to as more details and situations need explaining. It should be read in conjunction with the CLG consultation document which can be accessed via the following link https://www.gov.uk/government/consultations/retained-firefighters-pension-settlement-consultation and indicates where more detail can be found.
What is the modified scheme and am I eligible?
In essence the ‘Modified’ scheme is a hybrid of the 1992 Firefighters’ Pension Scheme and the 2006 New Firefighters’ Pension Scheme.
It is structured around the NFPS, but with the superior benefits of the FPS.
To be eligible to join you must have been employed by a fire and rescue authority between 1 July 2000 and 5 April 2006.
If you joined after that date, you are not eligible to join this scheme. Any service before 1 July 2000 will not be counted as pensionable service.
Firefighters who perform duty systems such as day crewing are not recognised as part-time workers and will not be able to join the modified scheme for any of the retained elements of their contract.
If you are a member of the NFPS but are eligible to join this scheme there is a procedure to allow this to take place. This is explained in more detail on page 21 and 22 of the CLG document.
Throughout the negotiations between the FBU and CLG, one of our goals was to maximise the number of firefighters who can join the scheme.
Scheme structure summary
The full proposals for the structure are outlined on pages 9, 10 and 11 of the document.
Below is a brief summary of some key points:
- The modified scheme accrual rate is 1/45th. This takes account of the double accrual that is available for some members of the 1992 FPS, dependent on their length of service. In the case of the modified scheme, the FBU have negotiated an improved position where this benefit is available to all scheme members irrespective of their length of service.
- The Normal Pension Age (NPA) of 55 is in line with the 1992 FPS. (The NPA in the NFPS is 60).
- The deferred pension age of 60 is in line with the 1992 FPS. (The deferred pension age in the NFPS is 65).
- The commutation rate will be fixed at rates that are applicable to the 1992 FPS on the day that the modified scheme legislation is introduced. The commutation process allows a scheme member to convert up to 25% of their annual pension at retirement into a tax free lump sum (must be within the HMRC limits).The current factors applied for this conversion in the FPS depend upon an members age at retirement and range from 22.4:1 at age 50 and 16.6:1 at age 65. What this means for is that at age 50 a firefighter will receive £22.40 for every £1 commuted. For example: If this firefighter commutes £1,000 they will receive a tax free lump sum of £22,500. The annual pension will of course be reduced by £1,000. The NFPS has a fixed commutation rate of 12:1 which is applied irrespective of retirement age.
- The modified pension scheme employee contribution rates will mirror those in the 1992 FPS. Any modified scheme service that is purchased for a period before 1 April 2012 will be at a rate of 11% but employee contributions for periods after this date will be at the higher rate imposed by the 2012 and 2013 increases.
- It was agreed between the FBU and CLG that the modified scheme would be based upon the NFPS structure. This was agreed because the NFPS already had legislation allowing retained membership while the FPS did not. It is important however to recognise that while the NFPS was used as the structure, the benefits are based upon those in the FPS.
- The firefighters’ compensation scheme will be amended as a consequence of the introduction of the modified scheme. Members will no longer be covered by Rule J4, which was a protected right for injury awards and was necessary at the time due to the lack of access for retained firefighters into a pension scheme. This rule will be revoked when the modified scheme legislation is enacted. This is covered in more detail on page 10 of the document
This scheme and the latest proposals for pensions
The modified scheme is being subjected to the same attacks as the FPS and NFPS. This is confirmed in page 13 and 14 of the document. It also outlines that the transitional protection and tapering arrangements for the modified scheme mirror those proposed for the FPS and NFPS. The FBU has raised concerns that the protection government is currently offering is not sufficient and will leave a significant number of current members facing the prospect of a capability dismissal because they will be unable to maintain operational fitness until age 60. The FBU has used the same argument for retained firefighters and is concerned that the protection offered for the modified scheme is insufficient.
It is important that you recognise the importance of defending our pension schemes and that the FBU campaign applies to members of the FPS, NFPS and potential members of the modified scheme. Government has already made your scheme more expensive to join and plans further detrimental changes that will affect the modified scheme before you have even had the opportunity to join. Please make sure you support our campaign. Please visit the FBU website www.fbu.org.uk for more information.
How do I join the scheme?
Steps and timescales for joining the scheme– This is covered on pages 14 and 15 of the consultation document. Please take the time to read this carefully. It is important as these timescales are tight and if you miss them, you could miss out.
The timescales are summarised below:
- If you are eligible, your FRA is required to use all reasonable endeavours to notify you within 2 months of the legislation coming into force.
- You will then have to notify them of your decision to join or not within 2 months of being notified by the FRA. It is important that you comply with this or you will lose the chance to join.
- If for some reason you are not notified by the FRA you will have 4 months to declare an interest to join. Again it is important that you comply with this or you will lose the chance to join.
- FRAs will then have 6 months to write to each eligible person who has declared an interest in joining. At this point the individual will be given details of any service they can purchase and the associated costs.
- The individual will have 6 months to confirm that they wish to take up membership of the scheme with associated costs etc.
Types of member
There are 3 different types of member which are explained on pages 15 &16.
A summary of the types is provided below:
1. Special firefighter member
· This is a retained firefighter who was employed for all or part of the eligible period and remains in service without a break in service. This could include a retained firefighter who subsequently moved to wholetime.
2. Special deferred member
· This is a retained firefighter who was employed in the eligible period, but left before joining the modified scheme and is not entitled to an immediate payment of benefits.
· It also covers retained firefighters who elect to join the modified scheme as a special firefighter member and subsequently leave employment or opt out of the scheme before becoming entitled to an immediate payment of benefits.
· It would also apply to members who is a member of the NFPS and is eligible to join the modified scheme but does not convert the NFPS service to the modified service.
3. Special pensioner member
· This is a former member who is eligible to join the modified scheme, but left before joining it and is:
§ Immediately entitled to their benefit
§ A special deferred member who is 60 or above
§ Entitled to an ill health pension
§ A serving member who reaches the NPA.
It is important that you recognise which type of member you are as there are different options available for repaying the past contributions as well as different arrangements, for converting and transferring benefits.
What are the payment options?
We have negotiated a range of options dependent on the type of member involved. This was done to enable as many members to join the scheme. We recognised that some members would be deterred from joining if they had to make additional financial arrangements.
These are summarised below and explained in more detail on pages 19 and 20.
1. Special firefighter member – alternatives available
· Repayment of back contributions by lump sum within 6 months
· Periodical payments over a period of 10 years maximum or until the individual retires, whichever is shorter. If the balance is not fully paid within this period, the outstanding amount can be deducted from the commuted lump sum or another source.
2. Special deferred member - alternatives available
· Repayment of back contributions by lump sum within 6 months
· Periodical payments over a period of 10 years maximum or until the individual becomes entitled to receive their deferred pension benefits, whichever is shorter. If the balance is not fully paid within this period, the outstanding amount can be deducted from the commuted lump sum or another source.
3. Special pensioner member - Repayment of back contributions by lump sum within 6 months. This can be deducted from the commuted lump sum.
Transferring benefits
Below is a summary of how this works. It is covered in more detail on pages 17and 18.
Transfer of benefits from other schemes. Subject to the rules of the 2006 scheme, special firefighter members can transfer benefits from other pension schemes into the modified scheme. This will not be allowed if the option has previously been made available as part of joining the NFPS.
Special deferred or special pensioner members do not have the option of transferring in benefits from other schemes.
Special firefighter members who have accrued 1992 benefits may be eligible to transfer them into the modified scheme. The details of this are outlined in the document. Again this is not available for special deferred or pensioner members.
Example: There may be a situation where a wholetime firefighter who joined after 2006, is a member of the NFPS and is also eligible to access the modified scheme for previous retained service. In this situation, and where this service is continuous, the fire fighter can retrospectively become a special member and convert the wholetime NFPS period into the modified scheme and remain as a modified scheme member. This is explained on page 18.
Converting benefits
This is covered on pages 21 and 22
Below is a summary of how it works.
Modified to NFPS. If a member of the NFPS is eligible to join the modified scheme for earlier service but wishes to count this as NFPS service, this can be achieved using the conversion factors provided by the scheme actuary. Please see the section on page 21 which explains this in detail.
NFPS to modified. If a member of the NFPS is eligible to join the modified scheme for earlier service and wishes to count it all as modified service, this can be achieved using the conversion factors provided by the scheme actuary. The member would have to have continuous service for this period and would have to pay the additional contributions. Please see the section on page 22, which explains this in detail.
Ill health benefits
There may be some retained members who have retired without being able to access an ill health pension, due to the fact that it was not an on duty injury. These may now be eligible for an ill health pension due to the fact that as full members of the modified scheme they are not restricted by these criteria.
Where this is the case the individual will have to undergo the full ill health process. This is an important development and is covered in detail on page 23.
Death in service for eligible members of the modified scheme.
This is an anomaly that has been ironed out through negotiation. If a retained firefighter would have been eligible for a death in service award had they been a member of the modified scheme in the period 1 July 2000 - 5 April 2006, their dependent will automatically receive a death grant of 2.5 times pensionable pay. The dependent will not have to pay the historical contributions as the award has been adjusted to take account of this. There is a timescale for an application of this award to be submitted. The document details this on pages 20 and 21.
This initial note gives an insight into the modified scheme. FBU members will get further information and assistance via the usual channels. There will be anomalies and more detailed questions to be addressed further down the line. Members will also want to know more details about their own personal circumstances for example how much it will cost them to join the scheme. Please make sure you keep informed on this issue and visit the FBU website www.fbu.org.uk to get more information as this issue progresses.
A pension worth defending
You and the FBU have won this victory. The FBU has negotiated good scheme with good benefits. The first job however is to make sure that we can defend this scheme against the government’s pension proposals which have already made the scheme more expensive. The modified scheme is under exactly the same attacks as the other two firefighter schemes and you must recognise that it is a scheme worth defending.
The current ballot for strike action concludes on 29 August and by now members will have received their ballot paper.
· It is vital that we all stand together to defend our schemes.
· As a union, we alone have won a major victory for RDS firefighters
· Now as a union we need to defend it.
· Please vote Yes in the ballot
Best wishes.
Yours fraternally
MATTWRACK
GENERAL SECRETARY
