Agenda item

The Director of People and Development (DoPD) presented the report which provided an update on the Lancashire Fire Local Pension Board for the period 1 April 2023 – 31 March 2024.

Members noted that the Public Service Pensions Act (PSPA) 2013 introduced the requirement to have a Local Pension Board to assist in the governance of the Scheme. The Board had no remit as a decision-making body but was established to assist the Scheme Manager to fulfil its functions which covered all aspects of governance and administration of the Firefighters’ Pension Scheme (FPS). The Combined Fire Authority had delegated its functions to the Director of People and Development. The Board’s Terms of Reference required that it met approximately twice a year and that the Chair of the Board could call additional meetings as required. It was noted that there were two meetings help per year during the period as planned.

Membership

One new employee representative was appointed to the Board during the year 2023-24. This appointment was carried out in accordance with the Board’s Terms of Reference.

Work Programme during 2023/24

During the period 2023/24, the hard work and commitment of everyone who had contributed to the work activities involved in fire pensions, meant that key activities continued to be delivered and projects progressed. The focus had been on the following major projects: i) the Sargeant/McCloud judgement relating to age discrimination; and ii) Matthews’ judgement affecting on-call members commonly referred to as the ‘Second Options Exercise’.

Significant work had been undertaken during the year to provide legacy and reformed scheme pensionable pay for the seven years of remedy for almost 1,000 members affected by the Sargeant/McCloud age discrimination legislation. Work had started to compile tax and contribution data for the remedy period from which, the data would enable the Local Pensions Partnership Administration (LPPA), the Service’s pension administrators, to roll back member records. During 2024-25 immediate choice members and deferred choice members would receive information to remedy their situation. During the year, the Board had received and considered update reports at key project milestones.

In terms of the Matthews Second Options Exercise, the Service had identified over 600 individuals who were eligible to express an interest in the exercise. Calculations for exercise were complicated and, in a small number of cases, required data going back as far as the 1960s and 1970s. The Service had made efforts to contact all individuals, but for some, address data was not available or out of date, nonetheless, the Service would make all reasonable endeavours to contact members. The challenge of implementing two significant, complex pieces of pension legislation, which affected large numbers of individuals concurrently, was not to be underestimated.

In order to retain knowledge and capacity sufficient for the implementation of the two projects, the Temporary Pensions Advisor, initially appointed in March 2022, was made permanent in September 2023. The role of Temporary Pensions Coordinator was vacant, and the Service was seeking to fill this role in the near future. The postholder would work to support the pensions workload, predominantly on the Matthews Second Modified Pension Scheme exercise until its completion date on 31 March 2025. It was anticipated that almost 700 calculations could be required for the project. An area of concern was that no mechanism had been finalized to deal with aggregation (RDS employee subsequently achieving a wholetime role).

In 2020/21, the Service implemented the pensionable allowances project which retrospectively applied backdated pensionable allowances for six years. As a result, the Service had received a number of Internal Dispute Resolution Procedures (Appeals) from employees and former employees. All applications were from Members who were dissatisfied that there were not included in the pensionable allowances exercise either relating to the type, temporary nature of the allowance or that their service fell outside of the backdating period. The Board had also been informed about a number of complex cases that had been dealt with at Stage 1 and Stage 2 over this period, including through the Internal Dispute Resolution Procedure (Appeals). The individuals had a right to appeal to the Pensions Ombudsman, whilst it was believed a number had taken that option, the Service had only been notified of two applications.

In March 2023, the government announced that the Pensions Dashboard Programme would require additional time to deliver the connection of pension providers and schemes in accordance with the connection deadlines set out in the Pensions Dashboard Regulations 2022. The new Dashboard Programme was due to be announced in spring 2024 and it was anticipated that the fire scheme date would be summer 2025.

The Board continued to focus on key areas identified by the Pensions Regulator and maintained an oversight of the key risks to the fund. The Risk Register had continued to be reviewed at Board meetings. The Board had also received a report on how the designated Pension Scheme Manager managed the LPPA Pensions Administration contract.

Training

To support their work on the Fire Local Pension Board, members continued to maintain and develop their knowledge and skills. External training opportunities continued to be available, members of the Board had access to the regular LGA monthly bulletins and website, and had utilized the Pension Regulators Public Service toolkit to develop their knowledge. It was anticipated that the Local Government Association would provide remote training to Board members nationally over the next year.

Looking forward to 2025/25

The Work Plan of the Board would focus on the principal activities of the Scheme as currently anticipated, which included: i) Implementing the requirements of the Sargeant/McCloud age discrimination legislation; ii) Implementing the requirements of the Matthews’ Second Options exercise; iii) Continuing to improve pension administration arrangements for the benefit of all members and employers of the Scheme including the continual improvement programme for the quality of data held by the scheme; iv) Assessing the impact of and responding to consultations that would have an impact on the Lancashire Firefighters Pension Schemes; v) Appraising the impact of the implementation of the Pensions Dashboard; and vi) Enhancing Board knowledge and skills.

The Plan would be reviewed and amended where appropriate to ensure it addressed any relevant issues which arose. 

The DoPD elaborated on his report by stating that the application of complex pensions regulations as well as the retrospective application of the binding case law decisions made in the senior courts in the cases of Matthews and McCloud, including those firefighters who had left since 2000 had resulted in considerable activity for those in the Service and at the LPPA trying to resolve the situation. 600 individuals were affected, and progress had been slow but was now improving. Significant issues included aggregation and taxation of these amounts.

The DoPD also summarized the position with regard to the Pensions Regulator and the LPPA as well as the response to Consultation on the Government Pensions Dashboard.

In response to a query from CC Pattison as to whether the pensions dashboard was catching up the DoPD confirmed this was the case but that the Service could only process those outstanding matters in relation to those individuals who currently worked for the Service.

In response to a query from CC Mein as to who had responsibility for providing the information and whether it was the current employer, the DoPD confirmed that it was the responsibility of every pensions provider, given that every employee must now be offered a form of pension, even in the commercial sector.

The DoPD added that the Service was also tackling issues with the administration of pensions for Green Book staff but that he was aware that the administration of these pensions was taking too long. 

CC Mein asked how the new employee member of the Local Pensions Board had been selected and the DoPD confirmed that a Fire Brigades Union member had been selected.

CC O’Toole commented that firefighters gave loyal service and they had paid into their pensions throughout their career and therefore it was not difficult to understand why firefighters got confused as to their entitlement and why there was such delay in processing the calculations and all those affected should be kept up to date with progress.

The Chair echoed CC O’Toole’s comment and added that he hoped the retirement workshops would be of some assistance in providing information.

The DoPD explained that because these decisions had been challenged through the courts some firefighters believed they were not being treated fairly and it had created some scepticism. In addition, with regard to giving advice, the DoPD clarified the Service could not give independent advice.

The target date for resolution of the outstanding pensions issues was October 2025.

Resolved: - that the report be noted.