1 How your pension is calculated
The Firefighters’ Pension Scheme 1992 (FPS 1992) is a final salary scheme. This means that the pension you build up is based on the amount of pensionable service you have accrued and your earnings when you leave the scheme. We work out your pension using the following formula:
- average pensionable pay x pensionable service (for the first 20 years) x 1/60
- average pensionable pay x pensionable service (for the next 10 years) x 2/60
Average pensionable pay, in most cases, will be your pensionable pay at whole-time rate, averaged over the last 365 days of pensionable service. However, if either of the two preceding years would produce a greater amount that year’s pensionable pay would be used instead.
Each day of pensionable service will count as 1/365th of 1/60th for your first 20 years of pensionable service and 1/365th of 2/60th for your next 10 years of pensionable service. The maximum pensionable service you can build is 30 years.
If you work part-time we would first calculate your benefits assuming you had worked whole-time throughout your active scheme membership. We would then multiply this whole-time pension by the actual length of service as a proportion of the whole-time length to give the part-time pension. It is the part-time pension that would be awarded to you.
For example, if you retired at age 55 having worked whole-time for 20 years and half-time for six years and your average pensionable pay was £36,000:
- the whole-time pension would be (20 x 1/60) + (6 x 2/60) x £36,000 = £19,200.00 a year
- the part-time pension would be (23/60 x £19,200.00) = £16,984.62 a year.
2 How your pensionable pay is calculated
Contributions, pensions and certain other benefits are based on ‘pensionable pay’ and ‘average pensionable pay’.
The items treated as pensionable are:
- pay received for the performance of the duties of your role, except for any allowances or emoluments paid on a temporary basis
- your permanent emoluments
- the amount forgone if you have agreed to surrender the right to receive part of your pensionable pay in exchange for West Sussex Fire & Rescue Authority providing a non-cash benefit (this is sometimes referred to as salary sacrifice)
- the amount paid for continued professional development.
Any payments you receive for continued professional development will be used to calculate an additional pension benefit that is calculated in line with guidance issued by the scheme actuary. The remaining payments are used to calculate your pensionable pay.
Average pensionable pay is the greater of:
- pensionable pay, at whole-time rate, averaged over the last 365 days of scheme membership
- that year’s pensionable pay if either of the two preceding years would produce a greater amount.
3 When you can draw your retirement benefits
Normal pension age (NPA) is 55 but you can take your retirement benefits for one of the following reasons:
1. Normal retirement
If you retire at age 55 the retirement benefits you have built up will be paid without reduction.
2. Early retirement
If you have reached age 50 and have built up at least 25 years' active scheme membership in the FPS 1992 you can request the early payment of your pension. Even though your pension would start payment before you have reached NPA, your retirement benefits would not be reduced to reflect the early payment.
There may be adverse tax consequences if you continue your employment as a retained or voluntary firefighter after your date of retirement if, at the time of your retirement, you are:
- under age 55
- employed by West Sussex Fire & Rescue Authority as a whole-time or part-time firefighter and also as a retained or voluntary firefighter.
If this applies to you, please contact your HR adviser to discuss your ongoing employment.
3. Ill health retirement
If you leave service at any age due to permanent disability you may be considered for an ill health pension. If the authority determines you should receive an ill health pension it would be payable without reduction. The type of ill health pension you receive will depend on whether your disability meets the higher or lower tier ill health conditions:
- Lower tier - If you are permanently disabled from performing the duties of your role you will be able to draw the retirement benefit you have built up.
- Higher tier - If you are entitled to a lower tier ill health pension award and you are permanently disabled from undertaking any other regular employment your pensionable service will be enhanced. If you have less than 10 years' pensionable service each year of pensionable service you hold will reckon at 2/60ths. If you have at least 10 but less than 13 years' pensionable service your pensionable service will be increased to 20/60ths. If you have at least 13 years' pensionable service you will be awarded seven extra years of pensionable service.
On retirement you will be given the option to convert pension to a lump sum, this is known as commutation. The amount of lump sum you would receive is determined by multiplying each £1 of pension you give up by an age related factor provided by the scheme actuary. There are limits on the amount of pension you can commute and take tax free and you may not commute any part of your higher tier ill health award. Full details of your commutation options will be provided with details of how to elect to commute your pension when you come to retire.
Reduction in lifetime allowance
If your pension savings are worth more than £1 million, you may need to protect your pension savings from the lifetime allowance tax charge.
4 Life cover
If you die in service and you are an active member of the scheme, a lump sum death grant of two times your pensionable pay will be payable to your spouse or civil partner, provided they were not living apart from you at the time of death. If you were not living with your spouse or civil partner the payment would be made to your personal representative.
If you are working part-time, the pensionable pay used to calculate your lump sum death grant would be at your part-time rate.
The lump sum death grant is paid free of tax if it is paid to your spouse or civil partner. If the payment is paid to your personal representative it may be subject to Inheritance Tax depending on the size of your estate.
5 Income protection for your dependants
If you die in service and you are an active member, a pension will be paid to your surviving spouse, civil partner and eligible children. Please be aware that the term ‘spouse’ does not cover cohabiting partners to whom you are not legally married to. The pension payable would be as follows:
- For the first 13 weeks, the pay you would have received.
- Following the first 13 weeks, half of the pension you would have received had you retired on the grounds of ill health with entitlement to a higher tier ill health pension.
- For the first 13 weeks, the pay you would have received.
- Following the first 13 weeks, half of the pension that is attributable to the pensionable service you built up after 5 April 1988 and that you would have received had you retired on the grounds of ill health with entitlement to a higher tier ill health pension.
- 18.75% of the pension you would have received had you retired on the grounds of ill health with entitlement to a higher tier ill health pension.
- If there are more than two eligible children then the equivalent of two children’s pensions are split equally across the children.