Pensions Crisis The Facts The Fiction The Fight

Pensions Crisis • The Facts • The Fiction • The Fight

1. Background Information on Pensions • 2. Arguments for Change • 3. Proposed Changes to FPS • 4. Proposed Changes to LGPS • 5. Timeframes for FPS • 6. Timescales for LGPS • 7. Conclusions • Is It Legal? • 9. What Has Been Done So Far? • 10. What Can We Do Now?

Background Information on Pensions Types of Pensions • State Pension – Available to All • Private Pensions – Private Sector or Individual Investments • Public Sector Schemes – Civil Service, Teachers, Police, Fire Service, Health Workers etc.

Main Changes For Each Scheme • State Pension Retirement Age • Private Schemes Closure & Final Salary Element • Public Sector Schemes Retirement Age, Contribution Rates, Accrual Rates, Ill Health/Injury Benefits & Closure With New Lesser Schemes

Firefighters Pension Scheme & Local Government Pension Scheme • Firefighters Pension Scheme: Open to Wholetime Firefighters Only Unfunded Is it Expensive? • Local Government Pension Scheme: Funded

Issues Common to all Pension Schemes • Mortality Assumptions 30% Improvement in the 8 Years to 2002 • Longevity – Life Expectancy • Government Report states that: People are not paying enough Contributions People are Living Longer People are Retiring too early

Nearest Comparable Scheme to FPS • Police Pension Scheme • New Police Scheme for new entrants, with existing scheme ring-fenced • Fire Service only Emergency Service not being afforded the Protection of Ring-Fencing Union Policy

2. Government Arguments For Change • Affordability! • Flexibility! • Modernisation!

Phil Woolas Quote: "All public sector pension schemes are facing change and it is right that we modernise firefighters' pensions - the most expensive scheme in the public sector. "We have carefully considered the responses to our pensions consultation and these proposals reflect the comments we have received, particularly the concerns of serving firefighters. We want a new scheme which is generous but affordable for both firefighters and the taxpayers that fund them and changes to the existing scheme which will help limit future costs. "These proposals are in line with our aim of developing a modern Fire and Rescue Service and honour our commitment to introduce new pension arrangements. They also reflect changes in the new legal requirements, for example on pensions taxation." *Local Government Minister Phil Woolas – September 2005

Responsibilities • Home Office: Police • Department of Work & Pensions: Health, Teachers, Civil Service, Etc • Office of the Deputy Prime Minister: Local Government (LGPS) & Firefighters (FPS) Schemes

3. Proposed Changes to FPS ODPM Consultation Exercises • Existing Scheme (FPS) • New Scheme (FPS) *Still Awaiting Detailed Consultation Documentation from ODPM on Injury/Ill Health Retirements, (due since 14th January 2005)

ODPM Proposes To: • Amend The Existing FPS Scheme For All Existing Members. • Introduce a New FPS Scheme For New Entrants

Eligibility For The New FPS Scheme • New Wholetime Firefighters. • New & Existing Retained Firefighters • Existing Wholetime Firefighters Who Choose To Opt In. Control Staff Are Deemed Ineligible!

Main Changes • Retirement Age & Accrual Rates • Transitional Arrangements • Deferred Pension • Ill-Health Retirement • Higher Tier: with enhancement • Lower Tier: without enhancement • Survivor Pensions • Death Benefit

Example 1 If a member reaches the age of 50 to 55 and has attained a minimum of 25 years pensionable Service, but not 30 years, they will be able to retire on pension. The Pension calculation, however, would be split between pre and post 1st April 2006 service. The pension for pre 1st April 2006 will be unreduced. Cont’d

Example 1 (cont’d) However, the Pension post 1st April 2006, will be reduced, by 5% for each year, between age of retirement and age 65 (deferred pension age) Scenario: A member retires at 50 with 25 years pensionable service. The post April 2006 Pension will be reduced by 75%, (15 Years x 5 %) *5 % is the Government Actuary figure

Example 2 A Member with 30 Years pensionable service completed by age 50, continues to work until age 55. Accrual Rate = 1/60th per year for years 1 – 20. Fast Accrual rate = 2/60th per year for years 21 – 30. Members can though, now accrue up to a maximum of 35 years pensionable service.

Example 2 (con’t) Accrual rate for last 5 Years (or part thereof) is 1/45th (equivalent to 1.33/60th) Therefore with 35 years pensionable service achieved, the pension will be 35/45th of final pensionable salary, (equivalent to 46.7/60th)

Example 3 Member continues to work to age 50+, and after 30 years pensionable service in existing scheme, joins the new scheme. At eventual retirement age the pension would be 40/60th plus 1/60th for each completed year of pensionable service in the new scheme. Accrual Rates = 40/60th + 5/60th = 45/60th Reason for Choice? = Possible lower contributions would boost members take home salary.

4. Proposed Changes to LGPS • Removal of the “85” Rule • this would increase normal retirement age from 60 to 65; and • raise the earliest retirement age from 50 – 55,excluding Ill Health • Increased contribution rates (currently 6%) to a range between 5.5% & 9% (dependant on earnings) • Restrict Pensionable Pay (basic salary, excluding allowances) • Ill Health Retirements Two Tier System

Two Tier Ill Health Scheme proposals intended to differentiate between; 1. Those that are permanently incapable of performing any gainful employment; and 2. Those incapable of continuing in their current role, but capable of other gainfulemployment. (Pension based on length of service only) NB: Only those in the first category would be eligible for an enhancedpension.

5. Timeframes for FPS • ODPM Plan To Close Membership Of The Existing FPS Scheme & Open The New Scheme on; 1st April 2006 • It is Still Possible that Timeframe May Slip • It Is Possible That Different Timeframes will Apply Across The UK. • ODPM Still Have Yet To Publish Ill Health/ Injury Proposals

At This Time We Must Assume, that ODPM Will Try To Meet Their 1st April 2006 Timeframe For The Implementation of a New Scheme and Changes to the Existing Scheme.

6. Timeframes for LGPS • Government decided not to proceed with changes to LGPS in April 2005 just prior to the Election, and in the face of Public Service Strike Threat • Government said they intended to seek further consultation with key stakeholders • the Pensions Green Paper proposals are intended to be implemented at the beginning of April 2006

7. Conclusions The proposals will effect different Members in a variety of different ways. This will be dependent on the member’s: • Age • Length of Service • Duty System Worked • Role • Health • Family Circumstances

8. Is it Legal? • Government Consultation • Fire & Rescue Services Act 2004 No Protection for Accrued Rights • Superannuation Act 1972 No Protection for Accrued Rights • Human Rights Act 1998: “Peaceful Enjoyment of Property” Protection for Accrued Rights Prior to Changes • Protection for Future Service Benefits? Seeking QC’s Opinion

9. What has been done so far? • Firefighters’ Pensions Committee (FPC) established & chaired by the Office of the Deputy Prime Minister (ODPM) • FBU Responses in Consultation Process • Lobbying Politicians • Press & Media • Campaign to inform Members of issues: Firefighter Magazine Specials, Circulars, Regional Mass Meetings, Regular Reports through the Committee Structures, Press & Media

10.What Can We Do Now? • FBU Conference Policy • Members must decide: Accept or Fight? • Keep up to Date with the Issues Ensure regular attendance at Branch Meeting, Read All Literature produced by the Union & watch the Press & Media coverage. • Lobby your MP, both individually & collectively, as a Branch • Discuss & Debate with other members - Regularly

Over 1 Million Public Sector Worker Affected Voted YES in Strike Ballots last year. • The TUC is still campaigning at Government level • Other Unions involved in LGPS talks GMB, TGWU, UNISON, NAPO, AMICUS, UCATT, CYWU • Coordinated action is still a possibility. WE ARE NOT ALONE

It’s your Pension It’s Your Future Financial Security It’s the Financial Security of your Families Fight To Keep It

Pensions Crisis The Facts The Fiction The Fight