- Voluntary retirement
The normal pension age for the 2006 Fire Pension Scheme is age 60. This is the earliest date that you could leave active employment and receive all of your benefits in full.
If you retire before age 55 there is no option to have your benefits paid immediately and they would become a deferred pension, payable in full at age 65.
If you retire between age 55 and 60, rather than having your benefits paid immediately with reductions, you could choose to defer them. This means that your 2006 Fire Pension Scheme benefits would be a deferred pension; payable in full at age 65.
If you retire from age 55, it is possible have your benefits paid immediately but they would be subject to percentage reductions. These reductions are based on your age in years and months at the date the benefits are paid.
The early retirement reduction factors for a retirement from deferred status can be found in the GAD guidance - Early payment reductions.
Example – How an early reduction percentage is worked out for 2006 schemeA: Age at date when benefits are paid = 55 years 0 months
Early reduction factor = 0.597
Percentage reduction = 1 – 0.597 = 0.403 x 100 = 40.3%
- Ill health retirement
If you have not reached your normal pension age and you leave because of permanent disablement, you may be considered for an ill health pension.
The conditions which have to be met for an entitlement to an ill health award are as follows:
For a Lower Tier Ill Health Pension
- You must have a minimum of 3 months qualifying service and,
- You must be incapable of performing any of the duties of the role in which you were last employed, because of incapacity of mind or body which will continue until normal pension age (60)
For a Higher Tier Ill Health Pension
*Regular employment means employment for at least 30 hours a week on average over a period of not less than 12 consecutive months, beginning with the date on which the issue of your capacity for employment arises.
- You must have a minimum of 5 years qualifying service and,
- You must be entitled to a Lower Tier Ill Health Pension and,
- You must also, because of incapacity of mind or body which will continue until normal pension age, be incapable of undertaking regular employment*.
A Lower Tier Ill Health Pension is payable immediately, with no reductions and will be based on the pension that you have accrued in your pension account. This pension has no enhancements.
A Higher Tier Ill Health Pension is payable immediately, with no reductions and will be based on the Lower Tier Ill Health Pension plus an enhancement of 2% of the gross Lower Tier Ill Health Pension before any commutation multiplied by your assumed period of pensionable service from date of retirement to normal pension age.
Example – Lower Tier Ill Health PensionEarned pension before commutation = £10,000
Pension after commutation = £8,000
Annual pension payable = £8,000
Example – Higher Tier Ill Health Pension
Earned pension before commutation = £10,000
Pension after commutation = £8,000
Period of assumed pensionable service from date of retirement to age 60 = 20 years
The Higher Tier Ill Health Pension element is calculated as follows:
2% x earned pension before commutation x period of assumed pensionable service
2% x £10,000 x 20 = £4,000
Lower Tier Ill Health Pension = £8,000
Total gross pension payable = £8,000 + £4,000 = £12,000
- Exchange pension or lump sum (Commutation)
When you retire, you can if you wish, exchange part of your annual pension entitlement to receive a lump sum payment. This is called commutation.
The commutation rate is 12:1 which means that for every £1 of annual pension you give up you get £12 of lump sum. You can commute up to 25% of your pension to provide a lump sum.
The only pension that cannot be commuted is a Higher Tier Ill Health Pension
Example – Commutation from 2006 SchemeRetirement pension = £8,000
Commutation option = maximum 25%
Commuted pension = £8,000 x 25% = £2,000
Annual pension payable = £8,000 - £2,000 = £6,000Lump sum = £2,000 x 12 = £24,000
You can either:
- Elect to commute the maximum amount allowed, or
- Commute any amount of your choosing (up to the maximum allowed), or
- Commute nothing
- Two Pension Entitlement
A regular firefighter whose pensionable pay is reduced more than 3 years before retirement date (and after 31 March 2007) may be eligible for Two Pension Entitlement, also known as Split Pension.
The reduction in your pensionable pay may be as a result of
- Taking up a different role (excluding temporary promotions)
- Becoming entitled to a different rate of pay in your existing role (excluding temporary promotions)
And consequently, the pensionable pay taken into account at normal pension age for the calculation of your pension will be less than it otherwise would have been,
The Two Pension Entitlement offers a form of protection by splitting your pension entitlement into two parts, one based on membership accrued before the pay reduction and one based on membership accrued afterwards.
If you have had a withdrawn pensionable allowance restored to you or you have been permanently promoted with an associated increase in pay then by the time you retire, the Two Pension Entitlement may no longer be advantageous to you.
- Additional Pension Benefits
An Additional Pension Benefit (APB) is an amount of pension paid at the same time, and in addition to, a firefighter's main pension.
APBs are awarded for
- In respect of Long Service Increments (LSI)
- In respect of contributions paid on Continual Professional Development (CPD) payments
- In respect of contributions paid on the increase in pensionable pay as a result of a Temporary Promotion. This is only applicable where your Fire and Rescue Authority has deemed Temporary Promotions to be pensionable
APBs in respect of CPD payments or Temporary Promotions are calculated annually using Government Actuary Department (GAD) factors, the relevant factor is dependent on your age last birthday. The total accrued value of these APBs are increased each April in line with the Consumer Price Index (CPI)
- Claim your pension
There are a few things that you can do to ensure that there are no delays with paying your pension.
You should inform your manager that you are retiring. It is preferable, but not essential that you give two months’ notice so that your employer and Hampshire Pension Services have enough time to prepare your retirement benefits.
Your manager will inform your employer's payroll provider and in turn they will prepare the necessary leaver form with your pay and service details and send to Pension Services.
Hampshire Pension Services will process your retirement within 15 working days of receiving all the necessary paperwork from both you and your employer. They will send you written notification of your actual retirement benefits.