Archived decisions
Hampshire Fire and Rescue Authority Human Resources Committee Item 8 28th November 2008 Re-employment of Grey Book Employees in the Firefighters Pension Scheme (FPS)/New Firefighters Pension Scheme (NFPS) and Green Book Employees in the Local Government Pension Scheme (LGPS) following Retirement Report by the Chief Officer |
Contact: Keely Stafford, HR Business Manager, Tel: 023 8064 4000 ext 5425 E-mail: [email protected] |
1 |
Summary |
1.1 |
For Grey Book employees, on 1 December 2006 the HR Committee agreed that eligible employees may request to commute their pension lump sum and, following a break in service, be re-employed in their existing role. On 20 April 2007, the policy was extended to eligible Green Book employees. It was also agreed that this policy would be reviewed on an annual basis to ascertain the impact on the Service's Equality and Diversity targets and career progression. This report therefore provides the Human Resources (HR) Committee the opportunity to formally review this policy. |
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. |
2.2 |
The HR Business Team will continue to review this policy on an annual basis to consider its affect on the workforce profile and People 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 (HMRC) 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 (to span two clear Sundays). If, following this retirement, the employee is re-employed; their monthly pension payment is abated, either in part or in whole, whilst they are in receipt of a salary payment. The monthly pension payment is based on their final salary prior to any period of re-employment. |
3.3 |
Employees who are re-employed can also request to join the appropriate pension scheme and build up benefits within that scheme under their new contract of employment. 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, or a Green Book employee, they can request to join the Local Government Pension Scheme (LGPS). There is no provision to re-join the FPS. |
3.4 |
The decision on whether or not to re-employ an employee who retires is for each individual Fire and Rescue Authority, as the employer, to determine. |
4 |
Use of Re-employment Policy since Introduction in December 2006 |
4.1 |
Since the introduction of this policy a total of 29 employees have opted to take their lump sum pension and commence re-employment to the same role. Of this 29: · 1 is a Green Book employee · 2 are firefighters · 17 are supervisory managers · 6 are middle managers · 3 are senior managers All 29 are `white British', male and aged between 50 and 59 years. Of this number, 10 have subsequently resigned since taking re-employment and 2 of these are now employed under Green Book terms and conditions of employment. This may indicate that some individuals consider re-employment to be 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. |
5 |
Information Considerations when Applying the policy |
5.1 |
The following information should be provided to and/or considered by the Director of Human Resources when assessing a request under this policy: · Recommendation from line management of the individual in support of the request. · 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 (the break must span two clear Sundays). · To be eligible, Grey Book individuals must be still in employment with Hampshire Fire & Rescue Service at the time of making their request, must be members of the FPS or NFPS and aged 50+ years with at least 25 years reckonable service, or 55+ years of age. · To be eligible, Green Book individuals must still be in employment with Hampshire Fire & Rescue Service at the time of making their request, must be members of the LGPS and have reached the age of voluntary retirement (60 years or over). · That the pension of employees who are re-employed is abated in full, in accordance with the provisions of the FPS, NFPS and LGPS. · Employees wishing to be re-employed must submit their request for 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. |
6 |
Contribution to Corporate Aims and Objectives |
6.1 |
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 |
People Impact Assessment & Risk Analysis |
The People Impact Assessment for this policy indicates there are some risks and advantages to consider. These are as follows: | |
7.1 |
Risks |
7.1.1 |
In the short term, it could be a barrier to HFRS 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 |
Within HFRS, there is currently emphasis on exploring flexible working options for employees as Grey Book employees in particular have historically been employed on a full time basis only. Evidence suggests that a number of those Grey Book employees who have been re-employed under this policy have also requested part time working. There is a risk that, if allowed, all part time working options within the Service will be filled by this employee group (i.e. white British males over a certain age), leaving little opportunity for other employee groups to alter their working patterns, or for the Service to employ people directly on a part time basis. This could affect the ability to attract diverse and under-represented employee groups |
7.1.3 |
Direct re-employment without advertising a vacancy could be seen as not openly recruiting. 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 (see below) |
7.1.4 |
Not allowing re-employment could potentially be considered discriminatory on the grounds of age. Due to the changes to the Tax legislation and the pension schemes, as well as the introduction of Age Discrimination legislation, employees who are eligible for direct re-employment under the FPS, NFPS or LGPS can remain in employment regardless of this policy. 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 HFRS 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. This is partly why the annual review of this policy was put into place |
7.1.5 |
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). Again, this could affect the ability to attract diverse and under-represented employee groups |
7.1.6 |
Current recruitment at Fire Fighter level is limited due to budget constraints and over establishment. However, there is little indication that a change to this policy would alter this position, although it could be considered that employees are incentivised to take the re-employment option and continue working for the Service when they would have otherwise retired permanently. This could reduce the opportunity for the Service to recruit a more diverse workforce, as well as reduce the salary budget (those that take re-employment attract far higher salaries and benefits than newer employees) |
7.1.7 |
Promotion activity is also limited currently for the same reasons as outlined above, although is more healthy than recruitment. However, there is an argument that re-employment is `blocking' promotion opportunities |
7.2 |
Advantages |
7.2.1 |
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 |
7.2.2 |
Savings on recruitment and selection costs. |
8 |
Resource Implications |
8.1 |
Physical Resources There is no impact on physical resources. Arguably, there is a cost saving as Grey Book employees who are re-employed will retain their existing Personal Protective Equipment 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. |
8.2 |
Financial Implications Retirement and re-employment is attractive to pension scheme members because it gives them a tax free lump sum through commutation, whilst allowing them to remain in employment in the same or similar role. 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 |
Consultation |
9.1 |
Prior to the policy for re-employment being agreed in December 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. |
9.2 |
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 had 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). |
9.3 |
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. | |