How much service do I need to qualify for a pension? To be eligible for any of the pensions you must have at least 2 years' pensionable service in the FPS. If you have less, you would still be eligible if you have had a transfer of personal pension scheme rights into the FPS. At what age would I be paid my pension? Normal pension age for all members of the FPS is age 55. If you choose to retire at or after this age, your pension would be put into immediate payment. Or you could retire earlier with immediate payment of benefits provided you have reached age 50 and have at least 25 years' service. An ill-health pension may be payable at any age. If you leave the FPS before becoming entitled to payment of age or ill-health retirement benefits you may be awarded a deferred pension. This would be payable from: age 60, or subject to appropriate medical certification, at any age on grounds of permanent ill-health which prevents you from undertaking firefighting or any of the other duties appropriate to your former role. Your fire and rescue authority may require you to retire if they consider that your retention in the fire and rescue service would not be in the general interest of efficiency. You must, however, be eligible at that time for immediate payment of an age retirement pension, having attained age 50 and having at least 25 years' pensionable service. How is a pension calculated? The FPS is a final salary pension scheme which means that your pension will be a proportion of final average pensionable pay. The proportion will depend, in part, upon how much pensionable service you have at the time of leaving the Scheme. For age and ill-health pensions, a principle of "fast accrual" is used. For each of the first 20 years of pensionable service, you will get 1/60th of average pensionable pay and for each of the following years you will get 2/60ths of average pensionable pay. Each day of pensionable service will count as 1/365th of 1/60th. The maximum number of 60ths that you can count is 40 (after 30 years' service). For example, if you retire at age 55 with 30 years of pensionable service and average pensionable pay of £30,000, your pension would be assessed as: (20 x 1/60) + (10 x 2/60) x £30,000 = 40/60 x £30,000 = £20,000.00 a year or, if you retire at age 50 after 27 years with the same pay, your pension would be: (20 x 1/60) + (7 x 2/60) x £30,000 = 34/60 x £30,000 = £17,000.00 a year What is pensionable service? This is your service as a member of the Scheme and in respect of which you have paid contributions. If you have ever worked part-time, the starting point for assessment of your pension is to use the pensionable service you would be able to count if whole-time. Various other periods may count as pensionable service e.g. that credited on receipt of a transfer value from another pension arrangement, unpaid leave (including additional maternity and adoption leave) for which contributions have been paid, or service which previously counted towards a pension which has since been cancelled. "Purchased 60ths" paid for by additional contributions would also be included in the assessment of pension. What is average pensionable pay? In most cases this will be your pensionable pay averaged over the last 365 days of pensionable service. If either of the two preceding periods of 365 days would produce a greater amount, the final pensionable pay from one of those earlier periods could be substituted. This protects your pension if you have a reduction in pay in your last couple of years' service. If you have a reduction in pay earlier on in your service, the "two pension option" could help you. If at any time you have worked part-time, the starting point for assessment of your pension is to use the pensionable pay you would be able to count if whole-time. Age retirement pension This would be payable to a firefighter who is age 50 or over with at least 25 years' service (it is referred to as an "ordinary pension" in the FPS rules), or age 55 or over with at least 2 years' service (this is referred to as a "short service pension"). For example, if you retire at 55, with 22 years' pensionable service and average pensionable pay of £28,000, your pension would be: (20 x 1/60) + (2 x 2/60) x £28,000 = 24/60 x £28,000 = £11,200.00 a year Part of the annual pension can be commuted to provide a lump sum if you wish. Ill - health pension If you have at least 2 years' pensionable service (or, if less, you are entitled to an award under the Compensation Scheme) and you are permanently disabled for the performance of the duties of your role, you may be considered at any age for an ill-health pension. There are two tiers of award – lower tier and higher tier. The lower tier award provides a lower tier ill-health pension only; a higher tier award provides a lower tier plus a higher tier ill-health pension. The lower tier award is made where the firefighter is permanently disabled for the performance of the duties of his/her role. A higher tier award is made where, additionally, the firefighter is permanently disabled for any other regular employment. "Regular employment" in this context means employment for 30 hours a week on average over a 12 month period. Calculation of lower tier pension If you have less than 5 years' pensionable service, the lower tier ill-health pension is calculated in the same way as an age retirement pension, i.e. 1/60 x pensionable service x average pensionable pay Assuming your average pensionable pay is £30,000 and you had completed 3 years' service at the date of retirement, your lower tier pension would be calculated as: 1/60 x 3 x £30,000 = £1,500 a year. If you have 5 or more years' pensionable service, the lower tier ill-health pension is calculated in the same way as a deferred pension. For example, assuming that you could have completed 30 years' service by age 55 but have completed only 12 years at the date of retirement, and average pensionable pay is £30,000, the lower tier pension would be calculated as: 12/30 x 40/60 x £30,000 = £8,000 a year Calculation of higher tier pension This involves a two-stage calculation. The first stage assesses a pension including an enhancement of service; the next stage deducts from the resultant pension an amount equal to the lower tier pension. The difference is the higher tier pension. The enhancement of a pension depends upon your length of pensionable service and APP means average pensionable pay. Enhancement according to length of pensionable service 5 or more years, but less than 10 each year of service will reckon as: 2/60 x APP 10 or more years, but less than 13 the formula is based on: 20/60 x APP 13 or more years the formula is based on: pensionable service* + 7/60 x APP *each year of service to 20 years = 1/60; each year of service after 20 years = 2/60ths The resultant pension, however, must not be greater than the age retirement pension that could be achieved at the normal pension age of 55, or age 60 in the case of Station Manager B and above. (And an age retirement pension must not be greater than 40/60ths of average pensionable pay.) Assume that, in addition to the lower tier pension you were entitled to a higher tier pension. You have 12 years' service. The enhanced pension which forms the first stage of the calculation would be based on 20/60ths of average pensionable pay. With average pensionable pay of £30,000 this would give: 20/60 x £30,000 = £10,000 The lower tier pension had been assessed as £8,000.00 a year and so the next stage of the calculation is to deduct this from the £10,000.00 assessed at the first stage: £10,000.00 - £8,000.00 = £2,000 In this example, with entitlement to a higher tier award you would be paid a lower tier ill-health pension of £8,000.00 and a higher tier ill-health pension of £2,000 a year. General If you had a period of part-time service, both the lower and higher tier pensions would first be assessed as if your service were whole-time throughout, and then pro-rated. Part of a lower tier pension (but not a higher tier) can be commuted to provide a lump sum. Adjustment for part-time service If you have ever worked part-time, the pension is first assessed as if you had worked whole-time throughout your service. Then account is taken of the part-time service you have accrued as a proportion of whole-time service. For example, if you retire at age 55 having worked whole-time for 20 years and half-time for 6 years (i.e. 26 calendar years) the starting point for working out your pension would be to assume you had worked whole-time throughout those 26 years. Even if you have been working half-time during your final year, average pensionable pay is based on the whole-time pay. Let's suppose it is £36,000. The whole-time pension would be: (20 x 1/60) + (6 x 2/60) x £36,000 = 32/60 x £36,000 = £19,200.00 a year Then account is taken of the hours actually worked during the calendar length of service: 20 + (1/2 x 6) = 23 years The whole-time pension is then multiplied by the actual length of service as a proportion of the whole-time length to give the "part-time" pension: 23/26 x £19,200.00 = £16,984.62 a year. Two pension option ("split award") Your pension will normally be based on an average of your pensionable pay over the last year of service or, if greater, the best average over one of your last 3 years. In most cases, this ensures benefits are assessed on the highest level of pay in a firefighting career. But what if you have a reduction in pay which does not fall in those last 3 years? On 1 April 2007 a new rule was introduced into the FPS; it allows a "two pension" option if a firefighter has a reduction in pensionable pay when taking up a different role or is entitled to a different rate of pay in an existing role. Pension rights before the reduction in pay are "preserved" as a deferred pension and new pension rights start to accrue in respect of your period of service after the reduction. The first pension would be based on your pre-reduction pay, your second pension would be based on your post-reduction pay. Both pensions would become payable when you are eligible to receive the second pension. But if, at that time, you would have been better off by not splitting your pension rights, you can ask your authority to cancel the split award and base your pension on your total pensionable service and final average pensionable pay. For example, cancellation may be to your advantage if, after the initial reduction in pay, you received a promotion. Additional pension benefit ("APB") APBs were introduced into the FPS to cater for the impact on pensionable pay of the phasing out of Long Service Increment ("LSI") and the introduction of Continual Professional Development ("CPD") payments. The removal of LSI affected the pension expectation of those firefighters who were receiving it. And CPD payments, introduced at the time LSI was phased out, could not be guaranteed to be in payment at the end of a firefighter's service as would be desirable in a final salary scheme. APBs allowed a way of protecting the value of the LSI for those who lost it, and an ongoing method of enabling CPD payments to provide a pension for a firefighter and dependants, whether or not CPD payments were being made at the end of the firefighter's service. If you are entitled to an LSI APB this will already have been assessed and notified to you by your authority. The value as notified will continue to increase in line with Pensions Increase Orders. It will be paid to you when you become entitled to receive your main FPS benefits. No further LSI APBs will be awarded. It was a one-off form of protection. CPD APBs, however, are ongoing and awarded to any FPS member who receives CPD payments. Your CPD payments are treated as pensionable and you pay basic pension contributions on them. Your authority also pay contributions at the employer's contribution rate. Any contributions paid by you and your employer over the previous 12 months are totalled on every 1 July and the sum is used to "buy" an amount of APB for that year by reference to factors provided by the Government Actuary. The amounts of APB accrued at the end of each year are indexed in line with Pensions Increase Orders, totalled and paid to you as a pension when you become eligible to receive your main FPS pension. Commutation If, on retirement, you prefer to have a lump sum as well as a pension you can provide one by commutation. To do this you must give written notice to your fire and rescue authority, no earlier than 4 months before your intended retirement and no later than the day before your pension is due to come into payment. You would state how much of your pension (including any Additional Pension Benefit) should be converted into a lump sum. You can commute as much or as little as you like provided that you do not exceed the permitted limit. The limit depends upon the circumstances of your retirement as follows: Circumstances of retirement Limit with an ill-health pension, or with an age retirement pension based on 30 years' pensionable service, or with a deferred pension, or at or after normal pension age (55) Maximum commutation of one quarter of pension (only the lower tier ill-health pension can be commuted in the case of a higher tier ill-health award) at age 50 or over but below age 55, with 25 or more but less than 30 years' pensionable service Lump sum must not be greater than two and a quarter times the pension before commutation The amount provided as a lump sum is decided by factors provided by the Government Actuary. The factor used will depend upon your age in completed years and months on the day your pension commences Commutation factors Link to commutation factors table. Example of calculation of commuted lump sum A firefighter born on 10 October 1955 has a last day of service of 17 May 2009. He has completed 30 years of service and is entitled to the immediate payment of his pension. He elects to commute the maximum amount which, in his case, can be one quarter. His pension before commutation is £20,000; after commutation it will be £15,000. On the day his pension commences his age will be 53 years and 7 months; the commutation factor, therefore will be 18.28. His lump sum will be £20,000 4 x 18.28 = £91,400.00 Allocation Allocation is an option to give up part of your pension at retirement to provide, on your death, a pension for a spouse or civil partner or dependant. It is an old provision which has remained preserved in the FPS since its early days even though dependants' benefits have improved from their original levels. An election to allocate must be given no later than the day before benefits become payable and no earlier than 2 months before. The amount provided as a pension on allocation depends upon the age and sex of the firefighter and of the nominated dependant. Your fire and rescue authority's pensions administrator can give you a personalised quote before your pension becomes due if you are interested in this option. Payment of benefits Pensions are paid in advance in regular instalments by a fire and rescue authority once they are satisfied that a person has entitlement to the award and subject to them having all the information they need. Lump sums by commutation are payable as soon as possible after the FPS member's last day of service. The authority has discretion as to whom a minor's award will be paid but they must have assurance that it would be used for the benefit of the minor. Similarly, if payment is due to a person who has become incapable of managing his/her affairs, the authority has discretion to pay it to another person as they think best. If there has been a loss to the funds of the authority because of fraud, theft or negligence on the part of a firefighter in connection with his/her employment, the authority may withhold all or any of the sum lost subject, in the event of dispute, to the order of a court. Pensions increase Benefits payable under the FPS are increased in line with the Retail Price Index under Pensions Increase Acts and Orders. The increase is paid with immediate effect to ill-health pensions and pensions for widow(er)’s, civil partners and children. It is paid with age retirement pensions from age 55, taking account of any increases which have accumulated from the date of retirement if earlier. Effect of tax rules The Firefighters' Pension Scheme has to comply with rules set by HM Revenue and Customs. There are, for example, limits on the amount of pension and lump sum which can be taken by a pension scheme member before tax charges apply. The two main limits on your benefits are the annual allowance and the lifetime allowance. The growth in the value of your pension each year must be compared with an annual limit set by the Treasury. If the value exceeds the limit, tax would be due, payable through self-assessment. When benefits are due the total value must be tested against the lifetime allowance, also set annually. If the value exceeds the limit, tax would be deducted by the fire and rescue authority and paid over to HM Revenue and Customs. The testing of the value of benefits is in respect of all pension benefits you may have accrued, including from arrangements other than the Firefighter's Pension Scheme. Consequently your fire and rescue authority will ask you to provide statements in respect of any other pension arrangement you may have so that they can check the total value of benefits before making payment from the Scheme. Your authority can give you more details of the way in which tax rules work, how benefits are valued and the limits for the next few tax years and the tax chargeable. Withdrawal of pension In certain circumstances a benefit payable under the FPS can be reduced or withdrawn. A Scheme member's benefits may be reduced by an "earmarking" or a pension sharing order issued on divorce, dissolution of a civil partnership, annulment or judicial separation. A fire and rescue authority may withdraw the whole or part of a Scheme member's pension in payment, for any period during which that person is serving as a firefighter with a fire and rescue authority (e.g. on re-employment after retirement). A fire and rescue authority may withdraw a pension in whole or in part, permanently or temporarily, if the person otherwise entitled to the pension: has been convicted of an offence of treason, or one or more offences under the Official Secrets Acts 1911 to 1989 (in the case of a dependant the offence must have been committed after the death of the Scheme member); or has been convicted of an offence committed in connection with his/her service as an employee of a fire and rescue authority which is certified by the Secretary of State either to have been gravely injurious to the interests of the State or to be liable to lead to serious loss of confidence in the public service. If a person has been receiving an ill-health pension for less than ten years, and has not reached age 60 the fire and rescue authority must review the entitlement of the person to receive the pension. To do this they will consider, with the help of a medical opinion, whether the person has recovered sufficiently to be capable of carrying out any duty appropriate to the role from which he/she was retired on health grounds. If a higher tier ill-health pension is in payment, the authority must also consider if the person has become fit enough to undertake any regular employment. In the case of a lower tier award, if the person's condition has improved to the point at which he/she could return to his/her role as a firefighter and the fire and rescue authority offer such employment, the pension will cease. A person who takes up the employment would have the ill-health pension cancelled but the service upon which it was based would count towards a subsequent pension. He/she would automatically be readmitted to the FPS. (Now that the FPS is a closed scheme these are the only circumstances where admission would be permitted.) If the person refuses the job offered, the ill-health pension would be cancelled and the service upon which it was based would count towards a deferred pension payable at age 60. In the case of a higher tier award, if the person is considered fit to return to his/her former role of firefighter, the position would be as described above (but service counting towards further pension entitlement would not include ill-health enhancement). If the person is considered fit for regular employment but not for his/her role as a firefighter, the enhancement would cease and the lower tier pension would continue in payment as a lower tier award. Deferred pensions put into payment early on grounds of ill-health must be reviewed too. If the person is fit for regular employment, the payment of the deferred pension would be suspended until age 60.