Archived decisions

Hampshire Fire and Rescue Authority

Human Resources Committee Item 11

1 December 2006

Re-employment of Grey Book Employees following Retirement

Report of the Chief Officer

Contact: Shella Smith, Employee Relations Manager, Tel: 023 8064 4000 ext 5425

E-mail: [email protected]

1

Summary

1.1

This report summarises the changes to the tax legislation from 6 April 2006, which mean that Grey Book employees can retire, receive their lump sum payment and then also be re-employed into a similar Grey Book role. SMT is asked to consider the position that should be adopted by the Service in respect of requests for re-employment.

2

Recommendations

2.1

That the Service offers direct re-employment following retirement to all Grey Book employees.

2.2

That the policy is reviewed after 12 months to consider its impact on the workforce profile.

3

Introduction and Background

3.1

Prior to 6 April 2006, tax legislation required any payments received from pension schemes as a lump sum payment to be paid as non-taxable if the employee actually retired. The advice given from Her Majesty's Revenue and Customs was that if employment was then taken up which utilised the skills from their previous employment (under which a pension was paid) then to all intents and purposes they were not `retired' and as such could become subject to penalties over and above normal taxation rates.

3.2

From 6 April 2006, under the Tax Simplification Rules employees can now receive their lump sum from the pension scheme and can take up similar employment without incurring any penalties. In order to receive the lump sum payment the employee must retire from their present post. If they then obtain another post, their monthly pension payment would be abated, either in part or in whole, whilst they are in receipt of a salary payment. The monthly pension payment would be based on their final salary prior to any period of re-employment. The employee can also request to join the appropriate pension scheme and build up benefits within that scheme. For Grey Book employees, this would be the New Firefighters' Pension Scheme (NFPS).

4

Information

4.1

The decision on whether or not to re-employ a Grey Book member of staff who retires is entirely a matter for each individual Fire and Rescue Authority, as the employer, to determine. In some circumstances, direct re-employment may offer advantages to the Service, as follows:

· Retention within the Service of business critical specialist skills and knowledge which may be difficult to replace in the short-term.

· Savings on recruitment and selection costs.

4.2

However, the Equality Impact Assessment of this policy indicates some disadvantages to having a policy of re-employment, for example:

· In the short term, it could be a barrier to the Service in its aim to increase the diversity of the workforce, and in particular could have an adverse impact on recruitment opportunities for the wider community.

· Potential reduction in development and promotion opportunities for other employees.

· A general policy on re-employment has the potential to result in retention of unsuitable employees as it would be open to all to apply.

5

Contribution to Corporate Aims and Objectives

5.1

Re-employment after retirement is likely to create a degree of interest amongst the current membership of the Firefighters' Pension Scheme (FPS) and a clear policy, which is effectively communicated, is necessary to avoid misunderstandings and the potential for de-motivation within the current workforce. This issue has implications for the corporate aims of achieving a more diverse workforce and successful modernisation of services and organisational culture.

6

Risk Analysis

6.1

The main areas of potential risk in respect of re-employment after retirement policies are in respect of equality challenges if a selective policy is adopted and in de-motivating those in the current workforce who may wish to access a tax free lump sum whilst remaining in employment if a more restrictive policy is introduced.

7

Resource Implications

7.1

Retirement and re-employment may be attractive to members of the FPS because it gives them a tax free lump sum through commutation. There is no immediate financial impact because of the changes to the funding of the FPS introduced in April 2006. Potential positive financial impacts are that it could result in increased movement from the FPS to the NFPS where employer contributions are lower.

8

Equality Impact Assessment

8.1

An impact assessment has been made on the proposals within this paper and shown that they are not discriminatory. They are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1988 and the Race Relations (Amendment) Act 2000.

9

Consultation

9.1

Formal consultation has been undertaken with all relevant trade unions, i.e. the Association of Principal Fire Officers (APFO), the Fire Brigades' Union (FBU) including the Black and Ethnic Minority Members (B&EMM) section, the Retained Firefighters' Union (RFU), the Fire Officers' Association (FOA), Unison and GMB.

9.2

Both APFO and the FBU have confirmed that they support the facility for re-employment following retirement as it provides greater flexibility and choice for their members and that the retention of talent and expertise outweighs any potential adverse equality impact. The RFU have no preferred approach as they do not believe the policy will impact on their members. Unison, GMB, the B&EMM section of the FBU and FOA have not submitted any comments.

9.3

The views of a number of external organisations have also been sought, including the Age Positive team at the Department for Work and Pensions (DWP), the Commission for Racial Equality (CRE), ACAS and the Equal Opportunities Commission (EOC). The DWP and CRE have confirmed that they are unable to provide specific advice regarding a policy on re-employment after retirement. The DWP advise that any policy should consider that the UK's ageing workforce is likely to result in increasing difficulties in attracting younger workers and in skills shortages in areas that have previously been filled by younger workers. The CRE point out the Service's duty under its Race Equality Scheme to undertaken an equality impact assessment before making a decision, which has been done. The other organisations who were contacted declined to comment.

Background Information (Section 100D of Local Government Act 1972)

The following documents disclose the facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of the report:

Firefighters Pension Scheme Circular 8/2006 - 11 April 2006

http://www.communities.gov.uk/index.asp?id=1163899

Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.