Purchasing additional service
An active member of the 2006 scheme who will not be able to accrue 40 years' pensionable service by age 60 can purchase additional service by the payment of additional contributions or by lump sum. Purchased service would count as pensionable service in the assessment of benefits.
Firstly a firefighter would decide how many additional years of pensionable service he/she wishes to add to those that would accrue in the course of service, and then – if taking the additional contribution option – would pay an additional percentage of pensionable pay up to the date of retirement. The percentage factors are supplied by the Scheme Actuary and reflect the age of the firefighter at the birthday following the election to pay. The closer to retirement, the higher the contribution rate.
The use of these factors is straightforward for whole-time firefighters.
For example, suppose a whole-time regular firefighter who will achieve 25 years' pensionable service at age 60 wants to purchase an additional 3 years and each year costs 1.54% of pensionable pay. He/she would be required to pay an additional 4.62% (i.e. 3 x 1.54%) of (whole-time) pensionable pay until normal retirement age, on top of standard contributions. Then, upon retirement at age 60, assuming final pensionable pay of £32,000, the pension would be assessed as –
(25 x 1/60) + (3 x 1/60) x £32,000 = £14,933.33 a year
In the case of a retained firefighter, because the pay is variable, the rate at which purchased years accrue would be variable, too. It would be necessary to discuss with the pensions administrator the best method of collection of contributions in an individual case. There could be various options.
For example, it may be possible to assess the amount of contribution that would be payable by a whole-time firefighter on whole-time pay each year and to have this deducted as a set amount, rather than as a percentage of pay. But this would only be possible where the pensionable pay for each pay period is high enough to accommodate the fixed deduction. An alternative approach may be to deduct a set percentage of actual pensionable pay and, at the end of every financial year, to work out – based on pensionable pay received as proportion of the pay of a whole-time firefighter in the same role – what proportion of a year has been purchased. Or payment could be by a single lump sum.
To pay additional contributions, an election to do so must be made at least 2 years before normal pension age (60) and you must not be due to retire (e.g. on health grounds) in the immediate future. The additional contributions would be deducted with effect from your next birthday following your election, along with your basic contributions. They would be assessed on your pensionable pay excluding any element treated as pensionable for APBs.
If you leave or cease paying contributions for any other reason before reaching age 60, you would be credited with the appropriate portion of service "purchased" to date. If you choose to pay by lump sum you must make your election to do so within 12 months of the date you became a firefighter, and the payment must be made within 3 months of the date on which you gave notice that you wished to pay.
The fire and rescue authority can give you further details about purchase and provide a copy of the actuarial factors used for deciding the additional contributions due.