Understanding the Firefighters Pension Scheme 2015
Explore the details of the Firefighters Pension Scheme 2015, including how you may be affected, membership categories, levels of protection, and the main elements of the scheme design. Learn about contribution rates, access to pensions, and benefits for ill health, death, and survivors. Discover if you are fully protected, tapered, or without protection under the scheme. Find out about the Career Average Revalued Earnings accrual rate, normal pension age, partial retirement, and deferred pension benefits within the scheme.
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Firefighters Pension Scheme 2015 www.local.gov.uk
Content How you may be affected 2015 Scheme Scheme Attributes How a CARE scheme works Contribution Rates Further Protections Statutory Protections Double Accrual Rates When can the Pension be accessed Ill Health, Death Benefits, Survivor Pensions
How You May Be Affected www.local.gov.uk
Membership categories 1. Fully Protected Not affected by the reforms 2. Tapered Will transfer into the new pension scheme after taper protection has come to an end 3. No Protection Benefits accrue in 2015 scheme from 1st April 2015
Fully Protected Within 10 years of current Normal Pension Age (NPA) as at 1st April 2012 FPS 1992 members aged 45 or over as at 1st April 2012. NFPS 2006 members aged 50 or more on 1st April 2012. Remain in current scheme No change
Tapered Protection FPS (1992) members between 41 and 45 on 1st April 2012. NFPS (2006) members between 46 and 50 on 1st April 2012. Will move to 2015 Scheme, but not on 1 April 2015. Will move to 2015 once taper protection comes to an end The taper dates are available on the intranet
No protection All other members will move to the 2015 Scheme from 1st April 2015.
The 2015 Scheme design www.local.gov.uk
Main Elements of Scheme Design Career Average Revalued Earnings (CARE) Accrual rate 1/59.7th Normal Pension Age of 60 Partial retirement of 2015 benefits from age 55 Deferred Pension Age equal to State Pension Age (with a minimum of age 65)
Main Elements of Scheme Design Deferred and pensioner benefits revalued in line with Consumer Price Index (CPI). Commute pension to lump sum at rate of 12:1.
What remains the same Guaranteed defined benefit scheme Tax free contributions Employer pays contributions Option to take tax free cash lump sum Index-linked pensions Built in Ill-health benefits / life cover Pension for dependents
How Does a CARE scheme work? www.local.gov.uk
How does a CARE scheme work? Each year the member builds up a portion of pension (1/59.7th) based on their salary in that year Each portion is increased in line with the revaluation rate until retirement At retirement, the portions built up each year are added together to calculate the total pension Early retirement reductions applied if benefits are taken before age 60
Example: CARE Pension (Year 1) Pension = 1/59.7th of your pay Earnings = 25,000 Year 1 Pension Benefit = 25,000 59.7 = 418.76 Plus uprate by AWE index e.g. = 2.5% 418.79 + 2.5% = 429.23
Example: CARE Pension (Year 2) Opening balance 429.23 Year 2 accrued pension 25,000 59.7 = 418.76 Pension Benefit at end of year 2 418.76 + 429.23 = 847.99 Plus uprate by AWE index e.g. = 2.5% 856.37 x 1.025 = 869.19
Example: CARE Pension Closing balance Year 2 = 869.19 Each year another portion is built up. Unlike a Final Salary scheme, the portions are not revalued if you gain a promotion. If an employee s salary increases then the portion in that year will be of a higher value.
Contribution Rates www.local.gov.uk
New Contribution Rates 4 contribution rates / pay bands Retained firefighter, contribution based on reference pay Part time firefighters contribution based on whole time equivalent pay
Contribution Rates Salary bands Up to 15,000 15,000 to 21,000 21,000 to 27,000 27,000 to 30,000 30,000 to 40,000 40,000 to 50,000 50,000 to 60,000 60,000 to 100,000 100,000 to 120,000 120,000 to 142,500 Over 142,500 FPS 1992 11% 12.2% 14.2% 14.2% 14.7% 15.2% 15.5% 16% 16.5% 17% 17% FPS 2006 FPS 2015 8.5% 9.4% 10.4% 10.4% 10.9% 11.2% 11.3% 11.7% 12.1% 12.5% 12.5% 10% 10% 10% 12.2% 12.2% 12.2% 13.5% 13.5% 13.5% 13.5% 14.5%
Statutory Protections for FPS/NFPS www.local.gov.uk
Statutory Protection (FPS/NFPS) The pension that built up before you transfer to the 2015 scheme is fully protected and will be calculated on your final salary at retirement (if you stay in the 2015 scheme) This will be paid in addition to the benefits earned under the 2015 scheme.
Double Accrual Guarantee (FPS) Recognises the expectation to double accrual for members in the 1992 Fire scheme. The following table shows the accrual rate that would be used to calculate the 1992 Fire scheme benefit based on level of service.
Double Accrual Guarantee Total continuous pensionable service upon retirement in the 1992 and 2015 scheme 30 29 28 27 26 25 24 23 22 21 20 or less Multiplier applied to earned 1992 service to recognise expectation to double accrual 1.333 1.31 1.286 1.259 1.231 1.2 1.167 1.13 1.091 1.048 1 Fraction that years of earned 1992 service is converted to 1/45th 1/45.789th 1/46.667th 1/47.647th 1/48.75th 1/50th 1/51.429th 1/53.077th 1/55th 1/57.273th 1/60th
When Can the Pension be Accessed? www.local.gov.uk
When can I retire? (2015 scheme) Normal Pension Age (NPA) 60. Age 60+ you can immediately take 2015 benefits. Retiring before NPA 2015 benefits will be reduced. Benefits accrued in 1992 & 2006 schemes retain existing NPA for benefits accrued under those schemes. If you meet the current scheme eligibility to retire, you can receive existing scheme benefits.
Partial Retirement 2015 scheme allows members to take pension at age 55 without actually leaving their employment; a reduction will apply, could continue to build up more pension. But, the 1992 and 2006 schemes require a member to fully retire in order to access benefits.
Deferred Benefits Benefits deferred if a member leaves before entitlement to immediate payment. Deferred Pension Age is individual s State Pension Age (minimum of age 65.) Can be taken early from age 55 with reduction. Can be paid on ill health grounds.
Ill Health Retirement and Death Benefits 2015 Scheme www.local.gov.uk
Ill Health Retirement - Protection Protected members will continue to have full provisions for ill health as per the scheme they are a member of at 31st March 2015. Tapered members will be subject to ill health rules of the scheme they were a member of at the 31st March 2015 up until their tapered protection date.
Ill Health Retirement - Enhancement Lower tier ill health Pension will be calculated on the pensionable service accrued to date without reduction for early payment. Higher tier ill health Enhancement based on lower tier ill health pension x service to NPA x 2%.
Ill Health Retirement Other Members who; Do not have protection, or Protection has expired, or Previous membership of the 1992 or 2006 Scheme without transitional protection due to > 5 year gap in membership. Will have ill health upper tier enhancement calculated in accordance with the 2015 Scheme. Accrued benefits in their previous scheme will form part of the lower tier pension.
Death Benefits (2015 scheme) Death in Service lump sum 3 x FINAL PAY Death on pension 5 year guarantee
Pensions for Survivors Spouse Civil Partner Co-habiting partner Conditions apply Wide age disparity clause Children's pension For any eligible children
Transfers to Money Purchase From 6th April 2015 no transfers will be allowed from unfunded public service schemes into defined contribution arrangements. Further information can be found on the pension intranet pages
Disclaimer The information contained in these slides are the authors interpretation of the current regulations. The information is subject to change due to various factors including, but not limited to, changes to rules and regulations introduced by the Government Actuary's Department, HMRC and/or the Department for Communities and Local Government. Changes can happen at short notice and may be implemented prior to the Council issuing any future revised documentation. Readers should take their own legal / financial advice on the interpretation of any particular piece of legislation. No responsibility whatsoever will be assumed by LGA or Humberside Fire and Rescue Authority for any direct or consequential loss, financial or otherwise, damage or inconvenience, or any other obligation or liability incurred by readers relying on information contained in these slides.
Further Information www.wypf.org.uk Humberside FRS portal
