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Fire pension lump sums
10/09/2009
The Scottish Government is to provide £6 million to assist Scotland's Fire and Rescue Authorities to backdate payments of pension lump sums to August 22, 2006.
This decision follows a Judicial Review decision in England and Wales covering similar factors provided under the police pension scheme. Providing the necessary finance has been necessary as the Treasury has refused to fund the extra costs as was done for fire personnel south of the border.
Announcing this during a debate on the new Fire and Rescue Framework, Minister for Community Safety Fergus Ewing said:
"Scotland's firefighters are amongst the best in the world, serving our communities with skill and professionalism.
"The UK Government is not prepared to meet these additional pension costs as they did for firefighters south of the border. However, this Government is not prepared to let these men and women lose out. We have therefore agreed to provide the £6 million to meet these additional pension lump sum costs.
"This is the right and proper thing to do for our firefighters and allows them to focus their resources on continuing to make our communities safer by improving fire safety and working to drive down the number of fire deaths."
Welcoming the announcement, Roddy Robertson of the Fire Brigades Union said:
"We very much welcome the announcement made today by the Minister. This demonstrates the Scottish Government's continued support for our frontline firefighters".
The Firefighters Pension Scheme (FPS) provides pension benefits to firefighters recruited up to April 5, 2006. This scheme provides that a firefighter can exchange up to 25 per cent of their pension for a tax free lump sum on retirement. (This does not apply to the New Firefighters Pension Scheme which covers firefighters recruited from April 6, 2006.)
The scheme provides that the lump sum provided must be the actuarial equivalent of the pension being exchanged. The Government Actuary Department (GAD) provides the factors that meets this requirement. Put simply this means that younger pensioners receive larger lump sums as they are potentially giving up more pension than their older counterparts.
The current factors were initially backdated to October 1, 2007. Similar factors apply in the police pension scheme and following a judicial review of the police factors the judge determined that the factors should be applied from the date they are provided by GAD. In the case of the FPS this was August 22, 2006 which is the date the factors are being backdated to.
Guidance will be issued to fire and rescue authorities advising them to identify those firefighters who retired between August 22, 2006 and September 30, 2007 who will be entitled to arrears. The arrears will also include interest.
Funding for the arrears and interest will be provided centrally by the Scottish Government.