The FPS2006 scheme is a final salary pension scheme which means that your pension will be a proportion of final pensionable pay. The proportion will depend, in part, upon how much pensionable service you have at the time of leaving the scheme.
For each year of pensionable service, you will get 1/60th of final pensionable pay. Each day of pensionable service will count as 1/365th of 1/60th.
For example, if you retire at age 60 with 35 years 28 days of pensionable service and final pensionable pay of £32,000, your pension would be assessed as –
35 28/365 x 1/60 x £32,000 = £18,707.58 a year
What is pensionable service?
This is your period of service as a member of the FPS and in respect of which you have paid contributions. If your hours of employment are less than whole-time, the "calendar" (qualifying) length of service would be pro rated to reflect your part-time hours. For example if you work half-time and have completed six "calendar" years of service, your pensionable service will be three years.
For retained firefighters, however, a totally different approach has to be used, based on pay. The actual pensionable pay they receive is compared with the pay that would have been received over the same period by a whole-time regular firefighter in the same role and with similar service. The NFPS calls this "reference pay". The comparison will normally be made over each financial year (1 April to 31 March) during the firefighter's pensionable employment. It will indicate the proportion of pensionable service which will count in each financial year. Suppose a retained firefighter worked for 3 financial years – from 1 April 2007 to 31 March 2010. Assume the pay of a whole-time regular firefighter in a similar role over the same 3 year period was –
1.4.2007 to 30.5.2007 = £24,000
1.7.2007 to 30.6.2008 = £26,000
1.7.2008 to 30.6.2009 = £28,000
1.7.2009 to 30.6.2010 = £30,000
These rates of pay would be the starting point for working out the retained firefighter's pensionable service. Next we need to break down these rates of pay to show how much would actually have been received by the whole-time regular firefighter within each of the financial years –
Year 1:
1.4.2007 to 30.6.2007: 91/365 x £24,000 = £5,983.56
1.7.2007 to 31.3.2008: 274/365 x £26,000 = £19,517.81
£25,501.37
Year 2:
1.4.2008 to 30.6.2008: 91/365 x £26,000 = £6,482.19
1.7.2008 to 31.3.2009: 274/365 x £28,000 = £21,019.18
£27,501.37
Year 3:
1.4.2009 to 30.6.2009: 91/365 x £28,000 = £6,980.82
1.7.2009 to 31.3.2010: 274/365 x £30,000 = £22,520.55
£29,501.37
Then the pensionable pay received by the retained firefighter has to be established. For this example, let's suppose pay records show that the pensionable pay received by the retained firefighter was –
Year 1: £6,429.12
Year 2: £4,132.56
Year 3: £8,528.21
To work out the service credit for each financial year, we divide the pensionable pay received by the retained firefighter by the pensionable pay received by the whole-time regular firefighter –
Year 1: £6,429.12/£25,501.37 = 0.2521 of a year
Year 2: £4,132.56/£27,501.37 = 0.1503 of a year
Year 3: £8,528.21/£29,501.37 = 0.2891 of a year
Total: 0.6915 years' pensionable service
It is 0.6915 years (approximately 252 days) that would be the pensionable service used in the pension calculation.
Various other periods may count as pensionable service, e.g. service credited on receipt of a transfer value from another pension arrangement, or unpaid leave (including additional maternity, paternity and adoption leave) where you have paid contributions, or "purchased" service where you have paid contributions to improve retirement benefits, or service which previously counted towards a NFPS pension which has been cancelled.
What is Final Pensionable Pay?
In most cases this will be your pensionable pay averaged over the last 365 days of pensionable service.
For parity with part-time and whole-time regular firefighters, the pensionable pay used in the pension formula for a retained firefighter will be the final pensionable pay that would have been used for a regular whole-time firefighter in a similar role and with similar qualifying service. In most cases this would be the (whole-time) pensionable pay averaged over the last 365 days of pensionable service.
It would not, however, include those payments which have been treated as pensionable for providing “Additional Pension Benefits" (APBs).
If either of the two preceding periods of 365 days would produce a greater amount, the final pensionable pay from one of those earlier periods could be substituted. This protects your pension if you have a reduction in pay in your last couple of years' service. If you have a reduction in pay earlier on in your service, the "two pension option" could help you.
If your hours of employment are less than whole-time, although your pensionable service will be pro rated to reflect your hours, the final pensionable pay used in the pension calculation will be the final pensionable pay you could have counted if you had been whole-time.