Agenda item

The HR Manager Pay, Pensions and Performance presented the report to members.

 

Internal Disputes Resolution Procedure – Stage 2 (IDRP)

A number of existing disputes concerning the pensionability of allowances had completed the Authority’s two-stage Internal Dispute Resolution Procedure, with some matters subsequently referred to The Pensions Ombudsman. The Authority had supplied the information requested in relation to those referrals and no formal determinations had been received.

 

No new IDRP applications or referrals to The Pensions Ombudsman were reported to the Local Pension Board on 14 September 2026.

 

Annual Benefit Statements

The statutory deadline for issuing 2026 Annual Benefit Statements (ABSs) was 31 August 2026. The Local Pensions Partnership Administration (LPPA) produced 1,757 statements for 1,844 eligible members, representing overall completion of 95.3%. Completion rates were 95.3% for active members, 95.4% for deferred members and 88.2% for other eligible members.

 

Of 483 members eligible for a McCloud Annual Benefit Statement Remediable Service Statement, 438 statements were issued. 259 of 292 active-member statements and 179 of 191 deferred-member statements. 45 remaining cases failed to be issued by the deadline. This was due to outstanding technical and data issues, including instances where additional information was required, which prevented full completion of the ABS. LPPA would continue to progress them when the necessary information became available.

 

The Scheme Manager considered that this was a material breach and in accordance with The Pension Regulator’s (TPR) guidance had reported the breach to the TPR along with an action plan.

 

Age Discrimination Remedy (McCloud/Sargeant)

In 2015, the Government introduced reforms to public service pension schemes, including the Firefighters’ Pension Scheme 2015 (FPS 2015). Transitional protections were applied so that some members of the legacy schemes (FPS 1992 and FPS 2006) remained in those schemes for longer, or did not move to FPS 2015 at all, depending on their age. Following the legal challenge known as McCloud/Sargeant, these transitional protections were found to be unlawfully age discriminatory.

 

From 1 April 2022, all serving members were moved to FPS 2015. The current phase of work was the implementation of the retrospective remedy for the period 1 April 2015 to 31 March 2022. This required eligible members to be given a choice between legacy scheme benefits and reformed scheme benefits for the remedy period.

 

Those members who were subject to the McCloud Remedy, who retired prior to 1 October 2023, were referred to as Immediate Choice members and were able to make a choice in relation to which pension scheme they wished to be in during the remedy period. In order to make this decision, they must be issued with a Remediable Service Statement (RSS). The Immediate Choice cohort comprised 367 members requiring an ABS RSS. By 31 August 2026, 319 statements had been issued, and 48 cases remained outstanding, comprising three tapered or unprotected cases, 33 protected-member cases and 12 beneficiary cases. Twenty-nine of the protected-member cases were linked to the Matthews remedy and could not be completed until that work was resolved. All outstanding cases involved individual complexity, and LPPA anticipated completion by December 2026, subject to the availability of data, national guidance and administrative capacity.

 

As at 31 August 2026, 85 members had elected to receive alternative Immediate Choice benefits. Payments had been completed in 80 cases, with five remaining outstanding. Progress continued to depend on individual case complexity, completion of member documentation and administrator capacity.

 

The Pension Scheme Manager had reported the position on delayed RSS issuance to The Pensions Regulator (TPR), including LPPA’s action plan and revised delivery timetable. The Regulator had acknowledged the original breach notification and had not requested any further information at this stage.

 

Implementation challenges were not unique to Lancashire Fire and Rescue Service (LFRS), and major administrative and data challenges were being experienced across the fire sector and other public sector pension schemes. However, available sector intelligence indicated that LPPA remained ahead of the national position in progressing the age discrimination remedy.

 

The Local Pension Board continued to receive detailed information on outstanding cases. For the Resources Committee, the principal assurance considerations were the completion of complex cases, administrator capacity, compliance with regulatory requirements and the clarity of communications to affected members.

 

Contingent Decisions

The age discrimination remedy regulations allowed certain member decisions made during the remedy period to be revisited where the member may have acted differently had the 2015 pension reforms not applied. These were known as contingent decisions and may include decisions to opt out of the pension scheme or, in specific circumstances, decisions relating to the purchase of additional service in a legacy scheme.

 

The Local Pension Board considered a detailed update on contingent-decision cases at its meeting on 14 September 2026. At that point, applications comprised five Added Pension cases, seven opted-out cases and 42 Matthews-related cases. The increase in applications reflected the progression of remedy implementation and the greater visibility of individual options as members received further information.

 

Some cases remained dependent on national legislative developments affecting opted-out members of the Firefighters’ Pension Scheme 1992. The Authority would continue to apply the current statutory framework and published guidance, with any material developments reported through the established governance arrangements.

 

Part Time Workers (Matthews 2) Remedy

The Matthews remedy addressed historic pension access for on-call firefighters who, for many years, were unable to join the Firefighters’ Pension Scheme on the same basis as wholetime firefighters. For LFRS, the current focus was on identifying eligible individuals, issuing options and calculation packs, and progressing elections into payment where members choose to join the Modified Pension Scheme.

 

The Service had identified more than 600 existing and former employees who were eligible to express an interest in joining the Modified Pension Scheme or purchasing additional pension. Reasonable endeavours had been made to contact all eligible individuals, including follow-up correspondence and the use of a tracing service where appropriate. This work remained ongoing. The Local Government Association had raised concerns nationally regarding the inconsistency of progress across Fire and Rescue Authorities (FRAs), with some FRAs achieving over 90% response rate to expression of interest letters and other under 24% response rate. LFRS’s response rate currently sat at 75%.

 

As at 31 August 2026, 622 individuals were within scope of the Matthews exercise. Of these, 445 had expressed an interest, 423 statements had been issued and 305 elections to join or purchase additional service had been received. This represented engagement from 71% of all individuals in scope, with statements issued to 95% of those expressing an interest. The statutory completion date for the Second Options Exercise was 31 March 2027.

 

From the 622 in scope individuals, 235 fell within the Special Pensioner Member cohort and were due immediate payment of pension if they elected to join. Of these 235 individuals, 215 had expressed an interest, 202 statements had been issued, and 182 elections had been received. Of these elections, 179 had been sent to the administrator and 131 pensions had been brought into payment. Thirteen statements and 15 member responses remained outstanding. LFRS had also identified 19 potential death-grant cases requiring specialist consideration, while other complex cases requiring manual intervention had been referred to the Government Actuary’s Department and were expected to progress by December 2026.

 

Any case that entered the process, for example, the individual was traced and submitted an expression of interest, must be processed by the deadline of 31 March 2027. Any traced case which missed this deadline would not be eligible to join the scheme. If untraced cases arose after the deadline, where the FRA was unable to demonstrate reasonable endeavours, this would become a financial risk for the FRA as any compensatory pension would need to be paid from the Fire and Rescue Services operating budget. Cases could stall for many reasons, response rates from members could often be slow, progress in processing the case with the administrator had several levels of contact with the member, which could take time. These cases would be tracked on a weekly basis to ensure this risk was minimised.

 

Further legislation relating to the Matthews remedy came into force on 1 April 2026 following Government consultation. This legislation made amendments in relation to deceased members, additional death grants and conversion options. As a result, fire and rescue authorities had a further implementation period to 31 March 2027 to complete outstanding work and apply the legislative changes fully. The Government Actuary’s Department (GAD) was also developing a calculator to support processing of additional cases arising from these amendments; the third iteration of this calculator was delayed by GAD and was now expected to be available by 11 December 2026. This provided LFRS a limited window in which to process complex conversion cases required before 31 March 2027 and this area remained of significant risk. The LGA had indicated their intention to request for a further extension in relation to these cases due to the limited time in which FRAs had been afforded to process cases.

 

Aggregation

One area that remained unresolved nationally was aggregation. This affected individuals who previously served in an on-call role and later moved into a wholetime role, and who may wish to combine pension benefits across periods of service.

 

In July 2026 the government reached agreement with the Fire Brigades Union (FBU) in relation to the outstanding break in service issue. This agreement only covered individuals who were claimants in the litigation and did not extend to non-claimants, nor did it extend to breaks in service occurring after 6 April 2000. The agreement confirmed that claimants with a break in service of one month or less would not be treated as disqualified solely because of the short gap before commencement of wholetime employment.

 

No final mechanism had yet been confirmed for these cases, and the Service was awaiting the outcome of relevant legal processes expected during 2027-8.

 

There is a potential that non-claimants would submit complaints to LFRS via the IDRP process.

 

Resources

The implementation of the Age Discrimination (McCloud/Sargeant) remedy and the Part-Time Workers (Matthews 2) remedy continued to place significant demands on both LFRS and its pension administrator, LPPA. LPPA had increased its staffing resource to support the additional workload but had lost key individuals from the business with the appropriate knowledge to process complex cases. LFRS continued to manage remedy implementation alongside business-as-usual pension administration responsibilities. Dealing with cases continued to be complex, challenging and resources intensive. 

 

The Government had extended the deadline for completion of the Part-Time Workers (Matthews 2) exercise to 31 March 2027. This provided additional time for fire and rescue authorities to complete outstanding cases and incorporate the effect of subsequent legislative changes.

 

The concurrent implementation of two substantial and complex national pension remedy programmes remained resource intensive. To support delivery, the Pensions Coordinator is supported by a temporary administrator, with the current arrangement in place until 31 March 2027. The postholder was primarily supporting the administration of the Part-Time Workers (Matthews 2) exercise.

 

Dashboards

The Pensions Dashboard Programme aimed to enable individuals to access their pension information online, securely and all in one place. Dashboards would provide clear and simple information about an individual’s multiple pension savings, including their FPS and State Pension. 

 

LPPA remained connected to the pensions dashboards infrastructure and was now focused on operational readiness, data quality, record matching and the accuracy of value data. The dashboard was expected to become available to members during summer or autumn 2027, subject to the formal Dashboard Available Point and national implementation arrangements. Continued monitoring was required because connection alone did not demonstrate full operational readiness.

 

County Councillor G Mirfin asked if the LPPA’s performance benchmarking data was available, the HR Manager Pay, Pensions and Performance advised specific benchmarking data was not available but regular discussion with other Authorities indicated that LPPA was performing well in line with other providers.

 

In response to a question from County Councillor G Mirfin in relation to the financial risk of staff and pensioners under Matthews coming forward after 1 April 2027 and LFRS being liable for those pensions, the HR Manager Pay, Pensions and Performance confirmed that this had only recently been identified as a risk by the LGA, the service was satisfied that reasonable endeavours had been carried out to trace those affected, including utilising tracing services and numerous written communications including recorded delivery. However, further proactive action would be undertaken to mitigate the risks. 

 

County Councillor G Mirfin asked if the service had enough resources to manage the pension requirements, the HR Manager Pay, Pensions and Performance explained that additional resources could be utilised however it was challenging to recruit individuals with the right knowledge and skillset in relation to pensions, due to the complexity of Matthews.

 

County Councillor G Mirfin asked if the service had a good relationship with LPPA, the DoPD confirmed that the service had a good relationship and was able to challenge respectfully when required. The HR Manager Pay, Pensions and Performance added that the service was LPPA’s first fire client and they had a long-standing working relationship.

 

Resolved: That the committee noted the progress made to date, the ongoing work required to complete outstanding remedy cases, the arrangements in place to monitor administrator performance and regulatory compliance, and the continuing risks associated with delivery of the remaining remedy work.