Agenda item

The HR Manager presented the report to members.

Internal Disputes Resolution Procedure – Stage 2 (IDRP)

Lancashire Fire and Rescue Service (LFRS) had several cases that had previously progressed through both stages of the IDRP process. These related to the payment of pensionable allowances within LFRS. Some members remained dissatisfied, particularly regarding the limitation of backdated allowances to six years or the classification of allowances as non-pensionable when applied to temporary roles. The Pensions Ombudsman had contacted the Service regarding these cases. While LFRS had provided the relevant information, no formal outcomes had been received to date.

Changes to Superannuation Contributions Adjusted for Past Experience (SCAPE) Rate

The SCAPE discount rate was a government set actuarial assumption used in public service pension calculations. Changes to this rate affected the factors used to calculate certain pension options and, for some members, could reduce the lump sum available on retirement.

On 19 May, the Local Government Association (LGA) advised Scheme Managers that HM Treasury had confirmed through a Written Ministerial Statement that the SCAPE discount rate was to increase with effect from 19 May 2026. This change triggered a review of the actuarial factors used within the scheme. This included, but was not limited to:

• Lump sum commutation for the Firefighters Pension Scheme (FPS) 1992
• early retirement factors
• transfers in and out of the scheme
• pension debits and added pension.

On 21 May, Government Actuary’s Department (GAD) published the revised FPS 1992 lump sum commutation factors, which took immediate effect for any retirements on or after 21 May 2026. As a result of the increase to the SCAPE discount rate, commutation factors had reduced. In some cases, the reduction in the lump sum could be up to 5% but this would vary depending on personal circumstances.

The immediate impact for Lancashire Fire and Rescue Service (LFRS) was administrative and member-facing, as retirement illustrations and packs needed to be reissued where affected. Local Pensions Partnership Administration (LPPA) was managing this process.

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.

A central part of the remedy was the issue of Remediable Service Statements (RSSs), which set out the pension benefit choices available to affected members. The original statutory deadline for issuing these statements was 31 March 2025. As with other public service pension schemes, implementation had been challenging due to the complexity of the legislation, the sequencing required with other pension remedies, system limitations, and the volume of manual processing required in some cases. Of 367 pensioner and beneficiary cases identified, 312 statements have been issued and 55 remained outstanding.

Of the 43 outstanding non-ill-health pensioner cases, 7 related to tapered or unprotected members and were expected to be issued by 30 June 2026. The remaining cases were primarily more complex records, including members affected by the Part-Time Workers (Matthews) remedy, where additional manual processing was required. Beneficiary cases were also more complex and were currently expected to be completed by 31 December 2026, alongside the remaining outstanding pensioner cases.

For active and deferred members, the outstanding RSSs were expected to be issued through the 2026 Annual Benefit Statement exercise. It was anticipated that all 51 outstanding active and deferred member statements would be issued by 31 August 2026.

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.

A total of 82 pensioner members had elected to take alternative pension benefits. Of these, 71 cases had been processed for payment and the remaining 11 were progressing through the payment process.

The Pensions Ombudsman had updated its approach to McCloud-related complaints. The Ombudsman had indicated an intention to publish significant determinations on common McCloud issues to support more consistent complaint resolution. LFRS would review any such determinations and consider any implications for local administration and member communications.

Contingent Decisions

The age discrimination remedy regulations allowed certain decisions made by members during the remedy period to be revisited. A contingent decision arose where a member may have made a different choice had the 2015 pension reforms not applied. This included decisions to opt out of the pension scheme and, in some cases, whether a firefighter would have purchased additional years in their legacy scheme had they remained eligible to do so.

LFRS had received 29 contingent decision applications, all contingent decision applications received had been approved by the Scheme Manager. The next stage was for individuals to receive a Contingent Decision Remediable Service Statement (CD-RSS), enabling them to decide whether to elect to opt back into their legacy scheme or to purchase added years for the remedy period.

On 26 March 2026, the Government issued a Written Ministerial Statement (WMS) addressing a legislative issue affecting some FPS 1992 members who opted out of pensionable service as a result of the 2015 reforms. The current wording of the Public Service Pensions and Judicial Offices Act 2022 prevented some individuals from being reinstated into their original legacy scheme through the contingent decision process. The WMS confirmed the Government’s intention to address this through further regulations so that eligible members could have their opted-out service for the period 1 April 2015 to 31 March 2022 treated as pensionable in the legacy scheme in which they last accrued service.

The Scheme Advisory Board had obtained legal advice on the position of fire and rescue authorities considering whether to progress affected cases before the supporting regulations were in force. LFRS did not currently propose to proceed ahead of legislation. This approach was intended to ensure that decisions were made on a clear statutory basis and applied consistently. The position would continue to be reviewed as further guidance and regulations were issued.

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, this work remained ongoing. 420 individuals had expressed an interest, and 390 calculation and options packs had been issued.

A total of 287 individuals had elected to join the scheme. Of these, 176 were Special Pensioner Members. LPPA had brought 124 of these cases into payment, with the remaining cases progressing through the payment process.

Further legislation 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 was also developing a calculator to support processing of additional cases arising from these amendments, which was expected to be available by the end of June 2026.

One area that remains 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. No final mechanism had yet been confirmed for these cases, and the Service was awaiting the outcome of relevant legal processes expected during 2026 and 2027.

A small number of on-call firefighters had been identified as being affected by an unintended gap in pension scheme membership arising from the interaction of the Matthews remedy and the McCloud remedy. These were employees who remained in continuous service beyond 31 March 2022, but who had not previously joined the Firefighters’ Pension Scheme. As a result, while they may now be able to remedy historic pension access issues, a further gap arose from 1 April 2022 onwards unless specific action was taken. To address this, the Scheme Manager had considered the use of discretion under Regulation 12(5) of the Firefighters’ Pension Scheme 2015 to allow affected individuals to opt into the Scheme with effect from 1 April 2022. Where this option was taken up, affected members would be required to pay the employee pension contributions due for the relevant period (with effect from 1 April 2022 to current date), with the Service meeting the associated employer contributions. The estimated maximum cost to the Authority, assuming full take-up by all eligible individuals, was circa £80,000.

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, Local Pensions Partnership Administration (LPPA). LPPA has increased its staffing resource to support the additional workload, while LFRS continued to manage remedy implementation alongside business-as-usual pension administration responsibilities.

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 incorporated 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 temporary Pensions Coordinator role continued to provide additional capacity, with the current arrangement in place until 31 March 2027.

Dashboards

The Pensions Dashboard Programme aimed to enable individuals to access their pension information online, securely and all in one place. LPPA completed connection of their schemes to the central digital portal in December 2025.

Following this connection, the government would issue LPPA with a Dashboard Available Point (DAP). This was the date when the pension dashboard would become publicly available. This date was set by the Secretary of State for Work and Pensions and would provide a minimum of six months’ advance notice.

In response to a question from County Councillor J Tetlow in relation to funding of the pension schemes, the HR Manager explained that the firefighter pension scheme was not an invested fund, with contributions today funding active pensions.

The Chair expressed his thanks to the HR Team.

Resolved: That the committee noted the report and its implications for pension administration and member communication.