This article has been taken from the Pensions Ombudsman Service website (www.pensions-ombudsman.org.uk)
Final decision published: 15 May 2015
We have published the final decision on the complaint made by Mr Milne against the Government Actuary’s Department (GAD) about the factor used to convert his pension into a lump sum at retirement and whether the factors should have been reviewed earlier than they were.
Tony King, the Pensions Ombudsman, has decided in Mr Milne’s favour. The Pensions Ombudsman decided that the factors should have been reviewed between 1998 and 2005, when Mr Milne retired. He has directed GAD to assess what the factor would have been in 2005 if reviews had taken place and to notify the administrator of the relevant part of the Firefighters’ Pension Scheme so that they can recalculate the cash sum. He also directed GAD to pay interest on any additional cash sum, from Mr Milne’s retirement date.
Background
Mr Milne is one of a small number of retired firefighters who had made similar complaints to the Pensions Ombudsman Service. There are many more who would have complained, but were asked not to pending the outcome of Mr Milne’s complaint. A similar issue arises in the Police Pension Scheme and so the outcome is also relevant to retired members of that scheme.
The complaints followed a 2009 High Court decision that in the Police Pension Scheme GAD was under a statutory duty to produce tables that resulted in “actuarial equivalence”. The firefighters’ scheme has identical rules in this regard. Previously GAD had believed that it was only required to review factors at the request of relevant Government departments. The outcome of that case was that new tables were introduced with effect from 2006. It did not deal with periods before then.
What does this decision mean for members of the firefighters’ and police schemes?
Strictly our decision only applies to Mr Milne. It is binding between him and GAD, unless there is an appeal to the court on a point of law.
Mr Milne was a member of the scheme in Scotland. Firefighters are employed by Fire and Rescue Authorities in England, Wales and Northern Ireland, and by the Scottish Fire and Rescue Service in Scotland, though these arrangements have changed over time. So the administration of the scheme involves a number of different bodies as well as different departments in Westminster and the devolved administrations.
However, the Pensions Ombudsman said in his decision that he hoped that all the relevant bodies would swiftly take steps to deal with the position of other affected retired firefighters and police so that it would not be necessary for their complaints to be pursued.
I could make a similar complaint. What should I do?
You should wait to find out what the response to the Pensions Ombudsman’s decision is.
It is possible that there will be an appeal to the court against the decision in Mr Milne’s case. If there is, then it should be known about quite soon as there is a normal time limit for appeals of a month.
If there is no appeal, then the various bodies will have to decide how to deal with all of the other cases. The Pensions Ombudsman Service is completely independent of them and so does not know whether or not they will voluntarily pay additional cash sums where applicable.
When we know what the response to the decision is, we may publish further information on our website. You may also want to stay in touch with your union, if a member.
How many retired firefighters and police are potentially affected?
We do not have the numbers, but the factors were not reviewed between 1998 and 2006, so anyone who retired in between may be affected if they are reviewed. However, it does not follow that a review will result in a different factor and a higher cash sum – particularly in the earlier years.