Response to points raised by ODPM - Hampshire Fire and Rescue Authority

1. Do you think that there should be different employer contribution rates for the existing and new pension schemes or should there by only one rate for both?

Yes, they should be different. This will ensure that the employer's contribution paid reflects more accurately the split of employees on the current and new pension schemes.

2. Do you agree that the review of the value of the pension schemes and contribution rates should take place every four years?

Yes, the review should take place every four years and the contribution rates adjusted accordingly. The four year period would be in line with others pending review.

3. Do you agree that the required payment into authorities pension account, in respect of ill-health retirements, should be on the form of a lump sum?

Yes, this then provides a clear incentive to authorities to reduce ill-health retirements. The alternative of making annual payments would smooth this incentive too much as well as adding to the administrative burden.

4. Do you think that authorities should be able to spread the lump sum payments in respect of ill-health retirements?

No, Accounting on a lump sum basis brings the practice in line with the requirements of FRS 17, eliminating the need for an adjustment to make the accounts FRS 17 compliant.

If lump sum payments are spread do you think that this should be over a period of three or four years?

If they are to be spread - three years.

5. Do you agree that authorities should be required to make lump sum payments into their pension accounts for all ill-health retirements from 8 February 2005 when the consultation document was issued?

Yes, as this will ensure authorities with lower levels of ill-health retirements are not penalised and avoid the perverse incentive to accelerate ill health retirements in advance of 1 April 2006.

6. Lump sum calculations

(a) Whether the lump sum should be actuarially calculated or standard figure

Actuarially calculated - this will ensure that the lump sum reflects the cost of the individual retiring.

(b) If the lump sum payment is actuarially calculated the factors that should be included in the calculation.

Factors should include age, length of service, salary, gender and marital status. It should be available in the form of a "look-up" table to keep the administration as simple as possible.

(c) If there is a standard lump sum payment, the proposal that the lump sum should be set at 4 x pensionable pay.

N/A

7. We would welcome your suggestions on the most appropriate system for making payments of the top-up grant.

It is suggested that payments could be based on the budget and paid alongside the Fire NNDR and RSG. This would ensure that administrative work is kept to a minimum. The final transfer to/from the ODPM would be made after the account has been audited.

8. Funding allocation

A new basis is needed for re-distributing FSS. The changes to the pensions element will be introduced from April 2006 which will be consulted on as part of the general FSS consultation in the summer. It is essential that HFRA is involved in this consultation.