Archived decisions
Hampshire Fire and Rescue Authority Human Resources Committee Item 7 Re-employment of Grey Book Employees in the Firefighters Pension Scheme and New Firefighters Pension Scheme following Retirement 21 September 2007
Report by the Chief Officer |
Contact: Keely Stafford, Employee Relations Manager, Tel: 023 8064 4000 ext 5425 E-mail: [email protected] |
1 |
Summary |
1.1 |
It was agreed by this Committee on 1 December 2006 that eligible employees would be able to request to commute their pension lump sum and following a break in service, be re-employed in their existing role. It was also agreed that this policy would be reviewed after 12 months to ascertain the impact on the Service's Equality and Diversity targets and career progression. The purpose of this report is to review the policy for Hampshire Fire & Rescue Service to offer direct re-employment following retirement to all Grey Book employees in the Firefighters Pension Scheme (FPS) and the New Firefighters Pension Scheme (NFPS), in accordance with the recommendations made in the Chief Officers' report dated 1 December 2006. Changes to tax legislation on 6 April 2006, affords that members of the FPS or NFPS can retire, receive their lump sum payment and then be re-employed into the same Grey Book role. |
2 |
RecommendationsError! Bookmark not defined. |
2.1 |
Hampshire Fire & Rescue Service continue to offer re-employment and employees should request consideration for this from the Director of Human Resources. Discretionary Powers: · If agreed by the Director of Human Resources, re-employment will be to the same position, hours, duty system and duties under a new contract of employment following retirement after a break in service of a minimum of 7 calendar days and a maximum of one month. · To be eligible, individuals must be still in employment with Hampshire Fire & Rescue Service at the time of making their request and must be members of the FPS or NFPS, aged 50 years (or over) with at least 25 years reckonable service, or 55 years of age (or over). · That the pension of employees who are re-employed is abated in full, in accordance with the provisions of the FPS and NFPS. · Employees wishing to be re-employed must notify the Service of their intention to request re-employment giving their contractual notice period. Requests made outside of this will not normally be considered. · Employees who are re-employed will exceptionally be entitled to count previous eligible service for the purposes of annual leave, pay and sickness allowances. However, they will not have continuous service for unfair dismissal and redundancy rights. |
2.2 |
The Employee Relations section of the Human Resources department will review this policy on an annual basis to consider its affect on the workforce profile and completed Equality Impact Assessment. |
3 |
Introduction Error! Bookmark not defined.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 were able to receive their lump sum from the pension scheme and could take up similar employment without incurring any penalties. In order to receive the lump sum payment the employee must retire from their present post, which requires a clear break of at least 7 calendar days. If, following this retirement, the employee is re-employed; 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) if they are re-employed into the role of a Watch Manager or below. If they are re-employed into the role of a Station Manager or higher, they can request to join the Local Government Pension Scheme (LGPS). There is no provision to re-join the FPS. |
3.3 |
To ensure harmonisation of the approach in this area, the provision of re-employment was extended to employees who are eligible members of the LGPS following a Report by the Chief Officer submitted to the Human Resources Committee dated 20 April 2007. |
4 |
Considerations |
4.1 |
The decision on whether or not to re-employ a Grey Book employee who retires is for each individual Fire and Rescue Authority, as the employer, to determine. Re-employment can offer advantages to the Service, such as: · Retention and continuity within the Service of business critical specialist skills and knowledge which may be difficult to replace in the short-term. This will enable the Service to retain the skills, knowledge and experience required in order to achieve and improve upon the standard of performance it is striving for. · Savings on recruitment and selection costs. |
4.2 |
Conversely, a disadvantage is that the Service could be challenged on not promoting open recruitment practices and attracting a more diverse workforce. However, if the Service did not allow re-employment, eligible employees could remain in work but just not have access to their lump sum pension. If this was the case, eligible employees could equally argue that they are being penalised for this, or discriminated against on the grounds of age as they were employed when the workforce was not so diverse. |
5 |
Use of Re-employment Policy since Introduction in September 2006 |
5.1 |
Since the introduction of this policy and from an eligible staff group of 32, a total of 17 employees have opted to take their lump sum pension and commence re-employment to the same role. Of this 17, 9 are supervisory managers, 6 are middle managers and 2 are senior managers. All are white British males aged between 50 and 58 years. |
5.2 |
Of the17 employees that opted for re-employment, 2 have since retired from Hampshire Fire & Rescue Service altogether and are no longer employed in any capacity. This may indicate that some individuals consider re-employment as a short-term arrangement, although there is little to prevent them from remaining in role until the age of 65, provided they are fit to perform the role in which they are employed. |
6 |
Contribution to Corporate Aims and Objectives |
6.1 |
Re-employment supports our Workforce Strategy in achieving our vision by empowering the workforce, as outlined in the Service's Integrated Risk Management Plan (IRMP). It also supports our aim to achieve Investors in People. However, as previously discussed, it is necessary to continually review this policy to ensure that it does not have a detrimental impact on the Services' aim of achieving a more diverse workforce. |
7 |
Risk Analysis |
7.1 |
The Equality Impact Assessment of this policy indicates there are some risks to consider in having a policy of re-employment, such as: 7.1.1 In the short term, it could be a barrier to Hampshire Fire and Rescue 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; 7.1.2 Potential reduction in development and promotion opportunities for other employees; 7.1.3 Direct re-employment without advertising a vacancy could be seen as not openly recruiting; 7.1.4 Retention of existing employees has potential to prevent recruitment of individuals on Direct Entry basis (i.e. recruitment for Grey Book roles of Crew Manager and above can now include external applicants who have not worked as a firefighter and worked their way up). Conversely, not allowing re-employment could be considered discriminatory on the grounds of age. Due to the changes to the Tax legislation, FPS/NFPS, and the introduction of Age Discrimination legislation, employees who are eligible for direct re-employment under the FPS (and NFPS) could have remained in employment regardless of this policy decision. Those who are eligible both since this policy was introduced and in the near future, were employed at a time when the demographics of the workforce of Hampshire Fire & Rescue Service was predominantly made up of white British males. Therefore, preventing access to their lump sum pension, which they have given many loyal years of service to accrue, could be considered penalising those who are now eligible. |
8 |
Resource Implications |
8.1 |
Human Resources Please refer to Section 7 of this report. |
8.2 |
Physical Resources There is no impact on physical resources. Arguably, there is a cost saving as employees who are re-employed will retain their existing equipment and Personal Protective Clothing which would otherwise have to have been purchased for new employees. In addition, there would be a cost saving on training for the same reason, employees who are re-employed would not require the same level of training as a new operational employee. |
8.3 |
Information and Communications Technology resources Not applicable. |
8.4 |
Financial Implications Retirement and re-employment is attractive to members of the FPS because it gives them a tax free lump sum through commutation whilst allowing them to remain in employment in the same or similar role. 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 or LGPS where employer contributions are lower. |
9 |
Equality Impact Assessment |
9.1 |
An impact assessment has been completed on the proposals within this paper and show that whilst there is potential for them to be discriminatory, this is attributable to the demographics that existed at the time when those currently eligible were employed. Therefore annual reviews of this policy are recommended. 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. |
9.2 |
Current recruitment at Fire Fighter level and promotion activity is healthy and is not reduced as a result of this policy. Hampshire Fire & Rescue Service's Equality and Diversity action in respect of recruitment and retention is not affected. However, due to the current demographics of the individuals this policy decision is most likely to apply to, this is to be expected. Until Hampshire Fire & Rescue Service increases intake of direct entry recruitment for higher level Grey Book roles, it is difficult to consider the actual affects this policy has on the demographics of the overall workforce. This is why it is recommended that annual reviews are held. |
10 |
Consultation |
10.1 |
Prior to the policy for re-employment being agreed in September 2006 formal consultation was 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. |
10.2 |
At that time, both APFO and the FBU confirmed their support for the facility for re-employment following retirement as it provides greater flexibility and choice for their members and consider 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 did not submit any comments. The views of a number of external organisations were also 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). |
10.3 |
No further consultation has been carried out since, as it is not considered necessary where little has changed with the circumstances of this policy. |
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/pub/280/FPSC82006UpdateonamendmentstotheFirefighters PensionSchemeFPSandtheFirefightersCS_id1165280.pdf Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act. | |