UPDATE ON SUCCESSFUL LEGAL PENSION CHALLENGE FOR “18-20 CLUB” FIREFIGHTERS

UPDATE ON SUCCESSFUL LEGAL PENSION CHALLENGE FOR “18-20 CLUB” FIREFIGHTERS - INCLUDES INFORMATION ON "FREQUENTLY ASKED QUESTIONS" 

 

18-20 UPDATE AND FREQUENTLY ASKED QUESTIONS 

 

Following the recent successful legal challenge in relation to firefighters who joined the 1992 Firefighters’ Pension Scheme (FPS) aged 18-20 we have been asked for clarification on some specific issues relating to this ruling.

 

Please find the most frequently asked questions so far which may assist you when you are explaining this to committees, officials and members. There may be others which you may wish raise.

 

1. Who will benefit from this ruling? 

Only firefighters who joined the 1992 FPS aged 18-20 and accrued or will still accrue 30 years’ service by time they reach age 50. 

 

 

1. What is the issue? 

Previously these 1992 FPS members had to contribute for up to 32 years to receive a 30 year pension at the earliest age of 50. This is because the FPS unlike many other schemes has an accrual cap of 30 years reckonable service i.e. no more pension can be accrued after thirty years contributions.

 

 

1. What is the remedy? 

The Secretary of State will now amend the scheme rules to allow members under the age of 50 who have accrued 30 years’ service to take a contributions holiday from the time they attain 30 years’ reckonable service until they reach age 50. 

 

 

1. When will this amendment take place? 

The ruling states that the scheme rules will be amended within 6 months of the date of the decision

 

 

1. What does this mean?

It means that if you are affected (i.e. one who joined before the age of 20) upon reaching 50 you will be able to:

 

• Retire immediately with a pension.
• Continue employment and recommence payment of contributions (the accrual cap remains in place with a maximum thirty years pension). 

• Or continue employment without resuming your pension contributions thereby becoming a deferred member. 

1. Explain these three options

• Retire immediately with a pension - You can retire immediately because you will have reached the earliest age you can retire from the FPS (except in cases of ill health). Because you have accrued 30 years you can commute the maximum and will not be limited to the lower commutation limit of 2.25 x your annual pension.

• Continue employment and recommence payment of contributions - You can chose to continue working but because you could retire immediately from age 50 with your pension you must resume pension contributions if you wish to retire at your expected NPA ( if this is below age 60) 

• Or continue employment without resuming your pension contributions thereby becoming a deferred member - You can continue to work without resuming your pension contributions but you will become a deferred member and will not be able to access your pension before age 60 except on ill health grounds. This is an important decision and could cost the individual a significant amount of money. Members are advised to take financial advice before taking this option 

 

1. What happens if I have already paid my contributions for this period?

If you have already accrued 30 years in the FPS, are under age 50 and made the contributions for periods over 30 years you will get a refund for these payments. 

For example if you joined at age 18 and you are already 50 you will get the contributions you actually made at age  48-50 ( 2 year’s contributions) refunded plus interest.

If you joined at age 19 and are already 50 you will get the contributions you actually made at age 49 -50 ( 1 year’s contributions) refunded plus interest.

 

 

1. Why does it only apply from 1 December 2006?

This will apply retrospectively to 1 December 2006 because this is the date when discrimination of this type became unlawful. 

 

 

1. If I get a pension holiday after I’ve paid in 30 years but I am still unable to retire because I am under 50 years of age what happens if I get a pay increase or get promoted during this period?

You will still remain a full active member of the scheme during this contribution holiday period and your final salary will reflect any permanent pay increases. 

 

However when you reach age 50 you will have to make a choice to either retire immediately, continue in employment and resume contributions or continue without resuming contributions. Please note that if you continue in employment but do not resume contributions you will become a deferred member and further any further increases in pay or promotion will not be considered. In this situation your pension will be calculated at the point you became a deferred member.

 

 

1. Am I fully covered for ill health etc during this pension holiday period?

Yes you are a full active member of the scheme during this period but again please note that if at age 50 you continue in employment but do not resume contributions you will become a deferred member.

 

 

1. What are the tax implications in relation to any refund?

The ruling outlines that the refund will be adjusted up or down to take account of any tax or national insurance underpayments/overpayments that have occurred in relation to this issue.  

 

 

1. Does this cover members who transferred pensions their previous employment?

We have already raised this issue with DCLG. Their initial position is that members who transferred pensions in from their previous employment will not be covered by this ruling as they made a choice to transfer their pension with the knowledge of the potential impact of the accrual cap. We are awaiting further information on this point.

 

 

1. Does this ruling cover someone who joined at age 18-20 but is transferred into the 2015 firefighters’ pension scheme before they accrue 30 years?

No. A person who joined at age 18-20 but is transferred into the 2015 scheme before they accrue 30 years will not suffer the same age discrimination and will be allowed to accrue more than 30 years reckonable service by combining the 1992 service and the 2015 service. This is possible because the 2015 scheme does not have an accrual cap.

 

There are some options available to members in this situation (there may be other options available dependent on each members circumstances)

 

• FF x joins the 1992 FPS age 18 and transfers into the 2015 scheme age 48. FF retires at age 50 as an active member of the 2015 scheme. FF x will receive a full 30 year unreduced pension from the 1992 FPS based upon the salary he actually retires on and the commutation factors applicable to age 50. He will also be eligible for 2 years pension from the 2015 scheme which is payable unreduced at state pension age or reduced from age 55. 

• Or FF x joins the 1992 FPS age 18 and transfers into the 2015 scheme age 48. FF retires at age 55 as an active member of the 2015 scheme. FF x will receive a full 30 year unreduced pension from the 1992 FPS based upon the salary he actually retires on and the commutation factors applicable to age 55. He will also be eligible for 7 years pension from the 2015 scheme which is payable unreduced at state pension age or reduced from age 55. 

• Or FF x joins the 1992 FPS age 18 and transfers into the 2015 scheme age 48. FF retires at age 60 as an active member of the 2015 scheme. FF x will receive a full 30 year unreduced pension from the 1992 FPS based upon the salary he actually retires on and the commutation factors applicable to age 60. He will also be eligible for 12 years unreduced pension from the 2015 scheme. 

 

I hope that the above proves useful when assisting members with their queries.

 

Yours in Unity,

 

SEAN STARBUCK

FBU National Officer - Pensions