Firefighters Scheme

New entrant

If a firefighter opts out of the 2006 or 2015 firefighters’ pension scheme with less than 3 months membership from commencement of the employment they are treated as if they hadn’t joined the pension scheme. The refund of pension contributions is paid to the firefighter by the employer through the payroll system.

If a firefighter moves into the 2015 scheme and opts out of the scheme, irrespective of how long they have been in it, they will be awarded deferred benefits.

If a firefighter is automatically enrolled into the 2015 scheme and opts out with less than 3 months membership, they are treated as never joining the 2015 scheme. The refund of pension contributions is paid to the firefighter by the employer through the payroll system.

If a firefighter opts out of the pension scheme or leaves employment with at least 3 months qualifying service, then deferred benefits are awarded. For any firefighters who no longer wish to remain a member of the relevant FPS, they should complete an Opt out form and return to the relevant fire authority, who should cease deducting pension contributions and notify LPPA. All notices to opt out of the relevant FPS should be signed, where the notice is submitted electronically a statement confirming the firefighter has personally submitted the form should be included. Firefighters should carefully consider the information available on the website and the form before opting out of the relevant fire scheme.

Calculation

The deferred benefit is total accrued earned pension. This is made up of

• The opening balance of earned pension from the last active scheme year and the index adjustment applied to it;
• The amount of earned pension in the last year;
• The amount of any transferred pension in the last active year.

Increase applied

The deferred benefits will be increased in April of each year in line with the ‘Consumer Prices Index’ so that the original value is maintained.

If a firefighter opts out of the pension scheme or leaves employment with at least 3 months qualifying service, then deferred benefits are awarded. The 2006 fire scheme is a final salary pension scheme which means that in most cases pensionable pay is based on the last 365 days of pensionable service (there is automatic provision in the regulations for the best of the last 3 years to apply).

Calculation

The calculation is based on the service the firefighter has accrued within the pension scheme, the accrual rate of 1/60th and the final pay at date of leaving.

The formula for calculating a deferred pension would be:

1/60th x pensionable service x final pay.

Example A firefighter aged 27 who has completed 6 years’ service and whose final pay is £25,000.00 would be entitled to a deferred pension of: 6/60 x £25,000.00 = £2,500 a year.

Increases applied

The benefits are increased in April of each year in line with the ‘Consumer Prices Index’ so that their original value is maintained.

Deferred benefits normally attract increases from the day following either:

1. The last day if service, or
2. The last day of the final pay period used in the calculation of benefits, whichever is the earlier.

If a Firefighter ceases to be a member of the Firefighters’ Pension Scheme and has at least two years membership within it, or has transferred in service, they become entitled to deferred benefits.

Calculation

The calculation is based on the service the firefighter has accrued within the pension scheme, the accrual rate of 1/60th and the final pay at date of leaving.

However, it also has an additional element as it is calculated as a proportion of the pension the member would have received had they continued until retirement age. In this way the member still receives some advantage of the ‘doubling’ of service even though they may have left prior to the point in their career where service is, in fact, doubled for pension purposes.

E.g. a fireman leaves the fire service after 10 years’ service at age 40. His average pensionable pay is £24,000. The fireman could have stayed on until age 55, by which time he would have accrued 25 years’ service.

The firefighter’s hypothetical pension would be:

(Average pensionable pay x service at age 55 including doubling)/60

24,000 x 30/60 = £12,000

The firefighters’ deferred pension would be:

(Hypothetical pension x actual length of service)/(Potential service to age 55, actual length)

(12,000 x 10)/25 = £4,800

Increase applied

The benefits are increased in April of each year in line with the ‘Consumer Prices Index’ so that their original value is maintained.

Deferred benefits normally attract increases from the day following either:

1. The last day of service, or
2. The last day of the final pay period used in the calculation of benefits, whichever is the earlier.

Once a fire fighter has been awarded deferred benefits, they have the option to transfer benefits to a new employer’s scheme or into a personal pension plan.

However, the pension benefits cannot be transferred to a scheme from which it may be possible to acquire a right of entitlement to ‘flexible benefits’.

These cover:

• Money purchase schemes
• A Qualifying Recognised Overseas Pension Scheme – QROPS
• Cash balance benefits, or
• A benefit calculated by reference to an amount available for the provision of benefits to or in respect of the member.

The transfer value must be paid one year before ‘Normal Retirement Date’ or 6 months after termination date, if later. It is the member’s decision whether or not to transfer membership out, it may not always count as the same level of benefits in the new scheme. If a member is interested in transferring out benefits, they should contact LPPA to obtain a CETV.

If a firefighter dies whilst still serving, providing he/she is still a member of any of the Fire pension Schemes at the time of death the following benefits are payable.

• A lump sum death grant
• A surviving spouse, civil partner’s or subject to certain qualifying conditions, a co-habiting partner’s pension in the 2006 and 2015 scheme
• Pensions for eligible children.

As the death in service benefits are different under each scheme please contact LPPA who will provide the details on a case by case basis.