2015 Firefighter Pension Scheme - Consultation Response

Transcription

1 OFFICIAL 2015 Firefighter Pension Scheme - Consultation Response Human Resources Committee Date: 5 September 2014 Submitted By: Director of Service Support Agenda Item: 6 Purpose To inform the Committee of West Yorkshire Fire and Rescue Service (WYFRS) responses to the latest consultation on the 2015 Firefighter Pension Scheme. Recommendations That the Committee notes the consultation responses Summary WYFRS have been consulted on the new 2015 Firefighter Pension scheme. The most recent consultation consisted of seven questions. WYFRS provided responses to all the seven questions. Local Government (Access to information) Act 1972 Exemption Category: Contact Officer: None SM Chris Lawton Human Resources Dept. Background papers open to inspection: None chris.lawton@westyorksfire.gov.uk Annexes: Consultation questions and responses 7

2 1 Introduction 1.1 West Yorkshire Fire and Rescue Service (WYFRS) have been consulted on the new 2015 Firefighter pension scheme. Attached are the consultation questions and the responses. 2 Information 2.1 WYFRS have been consulted on the new 2015 Firefighters pension scheme throughout The latest consultation questions and responses are contained within the Annex of this report. Future consultation questions and responses will be provided to the Human Resources Committee. 3 Financial Implications 3.1 Firefighters pensions are funded from three sources which are employee contributions, employer contributions and a top-up grant from central government. The top-up grant is calculated by taking the annual cost of pensions and deducting the employee and employer contributions. 3.2 The purpose of the changes to the firefighters pension scheme is to reduce long term liabilities and, therefore, reduce the overall cost of public sector pensions. Currently the annual cost of the firefighters pension scheme to this Fire Authority in the form of employer contributions ( 21.3% of pensionable pay(1992 scheme) and 11% of pensionable pay (2006 scheme) is 7.2m per annum. These employer contribution rates are based on the forecast cost of the existing members of the firefighters pension scheme. 3.3 The introduction of the 2015 pension scheme is part of the government s overall review of public sector pensions with a view to reducing the overall cost to the public sector. The changes within the 2015 firefighters pension scheme including moving from final salary to average salary and the move from a 30 year to a 40 year scheme will deliver long term financial savings. However, the protections included within the existing schemes will mean that the Government will not see any savings in the short term. 3.4 Consequently, whilst Government are proposing changes in the employee contribution rates to reflect the changing benefits included within the 2015 scheme, it is unlikely that there will be any reduction in the employer contributions in the short to medium term. 4 Equality and Diversity Implications 4.1 As there is only data on gender and age included in the Equality Statement, it is not possible to evaluate any potential adverse or positive direct or indirect impact upon groups with other protected characteristics. As the regulations are still in draft format, a detailed equality assessment cannot be made about the direct or indirect impacts upon male or female firefighters of varying ages. 5 Health and Safety Implications 5.1 None 6 Service Plan Links 6.1 Provide effective and ethical governance and achieve value for money in managing resources. 7 Conclusions 7.1 The consultation process is WYFRS opportunity to influence any further changes that are made to the 2015 firefighters pension scheme. It is, therefore, very important that responses are provided. The Committee is asked to note the questions and responses, and feedback to managers any additional observations they have. 8

3 Annex Question 1 Do the revised draft regulations continue to meet the design parameters of the Firefighters Pension Scheme 2015 as set out in the Proposed Final Agreement published on 24 May 2012? A: Yes, as far as we can tell. Question 2 Do the benefits (including the ill-health retirement benefits and other ancillary benefits) in the draft regulations sufficiently match those in the New Firefighters Pension Scheme 2006, with sufficient adaptions for a career average revaluation earnings arrangement? A: Yes. They appear to mirror those of the 2006 scheme, with the exception of the career average value and deferred pension age changes. There should be a clear definition within the regulations of what constitutes pensionable pay. Question 3 Do the proposals for the employer additional contributions for ill health awards and the employer additional contributions for a member who has been employer initiated retired sufficiently match the existing arrangements in the New Firefighters Pension Scheme 2006? A: Yes, as far as we can tell, the regulations match the existing regulations for additional employer contributions in these circumstances. Question 4 Do the proposals for the arrangements for the Firefighters Pension Fund sufficiently match those in the New Firefighters Pension Scheme 2006? A: Yes, The same fund will be used as the existing schemes for the collection of contributions and the payment of pensions. Surpluses and deficits will be managed in the same way as they currently are. Question 5 Can you foresee any challenges with the proposals for the procedure for ensuring the cost of the scheme is returned to the level of the cost cap as set out at regulation 152? The procedure for returning the cost of the scheme seems appropriate. However, there is yet to be any consultation on Scheme Advisory Boards, which play an important role in the process of returning the cost to within the 2% banding. Question 6 Do you have any comments on: - The proposals that employee contribution rates in the 2015 scheme are based on a member s full time equivalent pay? It would seem appropriate that the basis for the 2015 scheme contribution rates is consistent with other Public Sector Pension schemes such as the 2014 LGPS amendments. - The proposals for there to be four tiered bands, with some protection for new entrants? The tiered bands have been in use with the existing schemes for some time. Additional protection for new entrants will hopefully reduce the numbers of opt out s from new entrants to the scheme - The level of the tiered bands to be set each year between to as shown in the tables in Section 5? 9

4 A 1% increase year on year in the bandings seems appropriate. It is recognised that the majority of employee contributions will made from those earner within the middle two tiers. Question 7 Do you consider that there are any further equality issues, which the Department hasn t considered in the published revised Equality Statement which will result in individual groups being disproportionately affected by the reforms? If so, what do you consider to be the nature and scale of that disproportionate effect? A: As there are only data on gender and age included in the Equality Statement, it is not possible to evaluate any potential adverse or positive direct or indirect impact upon groups with other protected characteristics. As the regulations are still in draft format, a detailed equality assessment cannot be made about the direct or indirect impacts upon male or female firefighters of varying ages. 10

5 OFFICIAL Firefighters' Pension Scheme and New Firefighters' Pension Scheme: Equality Analysis Human Resources Committee Date: 5 September 2014 Submitted By: Director of Service Support Agenda Item: 7 Purpose To report on the outcome of equality analysis for those employees who are not members of either of the two Firefighters Pension Schemes. Recommendations That Members note the report. Summary In April 2014 Committee Members were updated on the Government's response to the consultation for an increase in employee contribution rates for the Firefighters' Pension Scheme (1992) and New Firefighters' Pension Scheme (2006). The Government's consultation response included an equality statement which suggested that there was no evidence of an adverse impact on any group of employee. West Yorkshire Fire and Rescue Service (WYFRS) carried out its own analysis to determine whether there was an adverse impact on any groups of WYFRS firefighters. The equality analysis indicates there is no adverse impact associated with Pension contribution rates on employees based on gender or ethnicity. Local Government (Access to information) Act 1972 Exemption Category: None Contact Officer: Steve Rhodes, Director of Service Support T: E: steve.rhodes@westyorksfire.gov.uk Background papers open to inspection: HR Committee Paper 4 April 2014: Firefighters' Pension Scheme and New Firefighters' Pension Scheme contribution rate 2014 Annexes: Annex 1: DCLG Equality Statement, March 2014 Annex 2: WYFRA Equality Analysis 11

6 1 Introduction 1.1 In April 2014 Committee Members were updated on the Government's response to the consultation for an increase in employee contribution rates for the Firefighters' Pension Scheme (1992) and New Firefighters' Pension Scheme (2006). The Government's consultation response included an equality statement (Annex 1). 1.2 Department for Communities and Local Govemment (DCLG) stated that it did not believe the Government's proposals were discriminatory on the grounds of sex, age or ethnicity, or discriminated against any of the other protected groups. 2 Information 2.1 West Yorkshire Fire and Rescue Authority (WYFRA) has carried out an equality analysis of its employees who are not members of any Firefighter Pension Scheme in order to determine if there was any disproportionate impact within West Yorkshire Fire and Rescue Service (WYFRS). This also ensured that WYFRA fulfils its legal equality duties to have due regard to the need to eliminate discrimination and advance equality of opportunity between persons who share a relevant protected characteristic and those who do not share it. 2.2 The DCLG analysis was based on a review of data collected between April 2013 November This indicated that, of those who were not in either Pension Scheme: 88% were men and 12% were women; 10% were BME, 90% White British (based on partial data). 2.3 DCLG did not have sufficient data to analyse impacts for other protected characteristics, except age. 2.4 WYFRS' analysis indicates there is no disproportionate adverse impact based on the gender or ethnicity of its employees (see Annex 2). It also found that, of those who were not in either Pension Scheme: 97% were men and 3% were women; 2% were BME, 98% White British. 3 Financial Implications 3.1 There are no financial implications arising from this report. 4 Equality and Diversity Implications 4.1 An equality analysis was carried out by WYFRS to ensure it fully considered potential adverse impacts associated with Pension contribution rates on employees based on gender or ethnicity. This is evidence of compliance with the General Equality Duty. 5 Health and Safety Implications 5.1 There are no health and safety implications associated with this report. 6 Service Plan Links 6.1 This report supports the Service Plan objective to "Provide effective and ethical governance and achieve value for money in managing resources". 12

7 7 Conclusions 7.1 The equality analysis indicates there is no adverse impact associated with Pension contribution rates on employees based on gender or ethnicity. 13

8 Firefighters Pension Scheme (1992) and New Firefighters Pension Scheme (2006) An equality statement of the increases to employee contribution rates, effective from 1 April 2014 March 2014 Department for Communities and Local Government 14

9 Crown copyright, 2014 Copyright in the typographical arrangement rests with the Crown. You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or This document/publication is also available on our website at If you have any enquiries regarding this document/publication, or write to us at: Department for Communities and Local Government Eland House Bressenden Place London SW1E 5DU Telephone: For all our latest news and updates follow us on Twitter: March 2014 ISBN:

10 1. Name of Directorate Local Government Finance, Workforce, Pay and Pensions Division 2. Please list all the policy streams in your business area. Equality Duty Background The public sector equality duty was created by the Equality Act 2010 and the duty came into force in April Schedule 19 to the Equality Act sets out the bodies that are subject to the public sector equality duty. This includes any organisation which carries out a public function, such as key public authorities like local authorities and central government departments. In summary those organisations subject to the public sector equality duty must have due regard to the need to: Eliminate unlawful discrimination, harassment and victimisation and any other conduct unlawful under the Equality Act Advance equality of opportunity between people who share a relevant protected characteristic and people who do not Foster good relations between people who share a relevant protected characteristic and people who do not The Equality Duty covers the following protected characteristics: age, disability, gender, gender reassignment, pregnancy and maternity, race, religion or belief, sexual orientation and marriage and civil partnership. Firefighters Pension Contribution Increases Background Lord Hutton was commissioned to review public service pensions and recommend how they can be made sustainable, affordable, and fair to both public sector workers and the taxpayer. In his interim report, published 7 October 2010, Lord Hutton found that the value and cost of a public service pension has increased by around a third because of longer life expectancy over the last fifty years and, despite recent reforms, most of these extra costs are being met by taxpayers. He recommended increasing employee contribution rates if the Government wished to make short term savings. At the Spending Review, the Chancellor announced that public service pension scheme members would see contribution increases of 3.2 percentage points, on average, from April 2012 to be phased in, over three years, with 40% increases in 2012, a further 40% in 2013 and the remaining 20% in Contribution Increases A statutory consultation, published in September 2011, proposed an increase in firefighter employee contributions of 1.28 percentage points, on average, to apply from April Ministers, in the light of the statutory consultation responses, decided that it was appropriate, in the specific case of firefighters, to proceed with an altered contribution rate which now generates an increased yield of 0.64 percentage points from the two firefighters pension schemes, rather than the originally proposed 1.28 percentage points that the Government consulted on. 16

11 Opt out review: The Government gave a commitment to review the impact of the contribution increases, including on opt-outs, before taking final decisions on how increases in and would be delivered Contribution Increases On 29 November 2012, the Department published a statutory consultation setting out the impact of the proposed pension contribution increases in the Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006) on protected groups. The intention was to realise 1.28 percentage points worth of savings from the firefighters pension schemes in Following the consultation, and on the basis that the number of opt outs in remained low and on a similar basis to , Ministers decided that it was justified to proceed with the increased contributions as consulted on. Opt out review: At the 49 th meeting of the Firefighters Pension Committee, the Committee unanimously agreed that the Government should continue to monitor the number of firefighters opting out and those choosing not to join the scheme, before final decisions were taken on how increases in would be delivered Contribution Increases In delivering savings from contribution increases the Government determined a number of central design parameters to ensure that any proposed increases in contribution rates should protect low earners and be more progressive, so that high earners pay proportionately higher increases to reflect their more generous pensions. The parameters below, which were reflected in previous years increases, continue to be adhered to in the proposed increases for There should be no increase in employee contributions for those earning less than 15,000. There should be no more than a 1.5 percentage point increase in total by for those earning up to 21,000. High earners will pay more, but no more than 6 percentage points (before tax relief) by This Equality Statement now considers the impact of the pension contribution increases in the Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006) on protected groups, taking into account recent opt out and non-joiner data collected from April 2014 and the responses to the most current and previous years consultations. 3. Identify any policy streams aimed at or impacting upon a Protected Group. A partial equality statement was published alongside the consultation document on contribution increases from April 2014, which set out those groups of staff who respondents had previously identified could be impacted by the contribution increases and the Department s consideration and response. The recent consultation asked whether there were any equality issues, which the Department had not considered in the partial equality statement, which would result in individual groups being disproportionately affected by the proposed contribution tiers. Seventeen groups responded to this question, with six confirming that there was no further equality issues, other than those previously identified, that should be addressed. The issues that had previously been identified were: 17

12 Age Discrimination Consultation Response Older members, more likely to be senior in rank (and, therefore, higher earners), could be disproportionately affected by having to pay higher contribution rates than those lower earners due to the use of tiered contributions. Younger members could be affected, paying more across their career for a similar level of benefits enjoyed by older members. Department s response Contribution rates are based on salary bands, so that those who earn more contribute more. This is a proportionate way of achieving an increase in contributions whilst protecting lower paid workers. Whilst some higher paid members may be older, this is not consistent as many older members remain lower earners: Table 1 provides a breakdown of the age and salary profile of firefighters (regular and retained) of the firefighters pension schemes, as at 31 March Table 1 shows that the majority (73%) of regular scheme members earning more than 50K are likely to be aged over 45. However, 63% of all regular scheme members aged over 45 earn less than 35K. The reverse applies in relation to younger members. Although 87% of regular scheme members aged under 45 earn less than 35K, of all regular scheme members earning 50K or more, over a quarter of these are aged under 45. Higher paid members accrue higher pension benefits and can also benefit from higher levels of tax relief. In terms of retained firefighters, 96% of these members, where the age profile varies, earn under 35K. Of the remaining 4% that earn above this salary limit, the majority are aged over 45. In conclusion, it is not possible to identify a specific age category which can be defined as being disproportionately discriminated against. Even if such a group could be identified, the Department believes that it can be objectively justified as a proportionate way of protecting low paid workers. Part time workers Consultation Response Lower paid workers, such as those part time workers, including those on the retained duty system, could be affected as they will need to pay the Full Time Equivalent contribution rate, not the rate based on their actual pay. Department s response The policy proposals were designed to ensure that part time workers, including those on the retained duty system, contributed towards their pension on a pro-rata basis, applying the principles of the Part Time Workers (Prevention of Less Favourable Treatment) Regulations Using the Full Time Equivalent pensionable earnings ensures that workers paid the same hourly rate will pay pension contributions at the same rate and on the same proportion of 18

13 pension benefits accrued. Under current final salary arrangements, part-time workers pay the same contribution rate as an equivalent full-time worker but their actual contributions are based on their actual pensionable pay. If those working part-time paid contributions on the rate of their actual pay, then these lower contributions would require cross subsidy by full time, or higher paid staff, to ensure the average level of contributions is delivered. Under current arrangements, the Department s view is that in a final salary scheme it is appropriate for part-time workers to pay the contribution rate based on their full time equivalent pay. However, further consideration with interested parties will be given to this prior to the introduction of the Firefighters Pension Scheme 2015, which will be a career average revaluation scheme. The Department has looked at the demographics of part time workers and found that the actual number of male scheme members that work part-time is 268 compared with only 51 female scheme members. However, although the actual number of males working part-time is greater than females, the proportion of female scheme members that work part-time (4.4%) is greater than that of males (1%). Table 2 provides a further breakdown of the number of full-time and part-time regular firefighter pension scheme members of the Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006). Table 3 provides information on the number of male and female retained firefighter members of the New Firefighters Pension Scheme (2006). The number of retained male firefighters (7,213) is significantly greater than the number of retained female firefighters (341). However, the actual proportion of male retained firefighters who are members of the New Firefighters Pension Scheme 2006 is broadly in line with the actual proportion of male retained firefighters in the service as a whole (and as reported in the Fire and Rescue Authorities Operational Statistics bulletin for England ) so there is no evidence to suggest that the impact of these proposals on male retained firefighters is greater than females. Non-joiners to the pension scheme increased number amongst females and ethnic minority staff Consultation Response One Fire and Rescue authority continued to claim that the proportion of firefighters choosing not to join the pension scheme, compared with those recruited to the service, is higher amongst females and ethnic minority staff and that the trend appears to be increasing. They highlighted that 26% of their current staff recruited after 2006 were female or from an ethnic minority background but represented 42% of non scheme members (increase of 2% from a year ago) and that non membership of these groups had increased over recent years. Department s Response Sex: The average scheme membership of both firefighters pension schemes is just over 4% female membership and nearly 96% male membership. The scheme membership of the Firefighters Pension Scheme (1992) is 97% male and 3% female and for the New Firefighters Pension Scheme (2006) 93% of scheme members (regular and retained) are male and 7% female. Race/Ethnic Minority - The Department does not hold specific data on the race and ethnicity of firefighters in the pension scheme. However, the Department does collect data on the firefighter workforce generally and this shows that there has been a gradual increase in the representation of minority ethnic staff in recent years, with minority ethnic staff accounting for 3.3% of all firefighters (regular and retained) at 31 March 2013, compared with 2.8% of all firefighters in 19

14 2008, and 1.5% of all firefighters in Section 7 of this report provides a detailed analysis of those opt outs and non-joiners by sex. The figures suggest that there is a higher proportion of females (12%), than males, who have opted out of the schemes and a higher proportion of females (11%) who have chosen not to join their pension scheme. However, the actual number of scheme members who are female is low, and therefore only requires a few females to opt out of the pension scheme to give a larger percentage of female opt outs. It is therefore difficult to take a representative view on opt outs and non-joiners by sex. Data on opt out and non-joiners has not previously (prior to April 2013) been collected in relation to the ethnicity of firefighters. The Department surveyed fire and rescue authorities to see whether this information could be provided. However, approximately only half of authorities said that the information could be submitted to the Department. Where it has been possible for authorities to provide data on the ethnicity of firefighters opting out or not joining the pension scheme the authority has done so. Where information was provided, the majority of staff (90%) opting out or choosing not to join the scheme were white/white British. This means that 10% of those who opted out of the scheme or chose not to join were from a minority ethnic group. This percentage is higher that the actual number of minority ethnic staff within the fire service as a whole. Overall, it is difficult to take a representative view on the number of ethnic minority firefighters not joining the scheme due to the low level number of ethnic minority firefighters in the service as a whole. Information provided by one authority, which employs 27% of all whole time female firefighters and 55% of all ethnic minority firefighters, showed that a larger proportion of females, and firefighters from ethnic minorities were not members of the New Firefighters Pension Scheme. It is acknowledged that the information provided by the authority showed an increase in non-membership of the pension scheme amongst females and firefighters from ethnic minority backgrounds. However, there has been limited information provided by fire and rescue authorities to suggest that a higher number of females and ethnic minority firefighters are opting out or choosing not to join the pension scheme solely because of the contribution increases that were implemented from April The Department is not aware of any evidence that suggests that female firefighters and firefighters from ethnic minorities are affected by higher contribution increases any differently from other firefighters, if other aspects of their employment, such as length of service are the same. The number of female and ethnic minority recruits into the fire service has increased in recent years, and therefore there would be a higher number of these protected groups who are members of the New Firefighters Pension Scheme (2006). Research suggests that 2006 Scheme members are more ambivalent about remaining in the pension scheme, and recent information shows that 2006 scheme members are more likely to opt out of their pension scheme, which is why the Department has afforded some (contribution rate) protection for these members of staff. The Department will continue to monitor opt-outs and examine trends by sex and ethnicity where evidence is available. Conclusion: There is no evidence that contribution rates are discriminatory in terms of sex or ethnicity. The Department asked authorities to select from a list to provide the reason for firefighters opting out of their pension schemes. Although little qualitative information has been provided, where information is available there is no evidence to suggest that those personal decisions are solely 20

15 due to contribution rate increases. Even if the proposals were seen to be discriminatory based on sex or ethnicity, the Department believes that the proposals can be objectively justified as a proportionate way of achieving the legitimate aim of increasing contributions for all members of firefighter pension schemes in order to make economic savings. Other categories of staff disproportionately affected Consultation Response Some respondents suggested that the following groups could also be disproportionately impacted by the contribution increases, although some of the respondents acknowledged that these were not protected groups covered by the Equality Act: Single parent families, or single earning families, could be affected due to the struggle to meet higher contributions, with one respondent higlighting this could impact more on females. An equality issue existed between high and lower earners due to the use of tiered contributions Middle income earners, earning between 21,000 and 50,000 would be affected due to the level of contribution increases proposed. Tiered contributions created an imbalance between employee and employer contributions that were paid into the two firefighters pension schemes. New entrants to the 2015 scheme would be expected to pay for the retention of benefits that members had built up in their current pension schemes. Members of the Firefighters Pension Schemes faced higher contributions than those members in other public sector pension schemes. The Department does not believe this proposal is discriminatory on the grounds of sex, age, ethnicity or discriminates against any of the other protected groups. Other protected groups: Pregnancy and maternity the proposal to increase pension contributions will not impact on the pension rights of those female firefighter scheme members who are on, or planning to take, maternity leave. Those scheme members will continue to make pension contributions calculated according to their actual earnings during their maternity leave. In addition they will continue to have the option to make up any shortfall on pension contributions, for any unpaid periods whilst on maternity leave, on their return to work. Disability Gender reassignment Sexual Orientation Religion or belief Marriage & Civil Partnership The Department does not hold scheme membership data on the protected groups set out above. However, the Department has considered the impact of tiered increased pension contribution increases on these protected groups, and has concluded that the proposals do not discriminate against these groups. 21

16 4. Who has responsibility for developing these policies? Chris Megainey, Deputy Director of Workforce Pay and Pensions, and Andrew Cornelius, Firefighters Pension Team Leader. 5. Are there any EU or other statutory regulations that need to be adhered to regarding equalities? The Equality Act 2010 and the Part-time Workers (Prevention of Less Favourable Treatment) Regulations The following summary will be analysed and used as evidence which you considered in demonstrating due regard to the Public Sector Equality Duty. Have you used information from any of the following sources when developing policies? This can be (but not limited to): Links to new/existing reports and research Research commissioned by the Department in July 2012, on behalf of the Firefighters Pension Committee: Research Works: Research into Firefighters attitudes to their pension scheme, including the impact of increased employee contribution rates Extracts from consultation responses and any follow up with respondents Responses from Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006): Proposed increases to employee contribution rates effective from 1 April 2012 Consultation Responses from Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006): Proposed increases to employee contribution rates effective from 1 April 2013 Consultation Responses from Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006): Proposed increases to employee contribution rates effective from 1 April 2014 Consultation Data captured/published The Fire and Rescue Service: Operational Statistics Bulletin for England Data collected from Fire and Rescue Authorities on the number of firefighters that have opted out or chosen not to join their pension scheme during and Valuation data, as of 31 March 2012, collected from Fire and Rescue Authorities 22

17 Minutes of meetings/notes from stakeholder workshops There were no minutes or notes of the meetings, but equality considerations have been briefly discussed with the employers and unions at meetings relating to members opting out or not joining their pension scheme. 7. Have you discovered any of the following and as a consequence taken actions on identified equality issues? Have you discovered any of the following and as a consequence taken actions on identified equality issues: Known difference in needs for those with a protected characteristic, and Evidence of an adverse equality impact on those with a protected characteristic. List any actions taken to mitigate again adverse equality impact on those with a protected characteristic The overall policy objective is that pension scheme members will need to contribute more towards their pension, with higher earners paying more. The Department has concluded that this proposed policy will not have an adverse equality impact on any of the protected groups, although evidence from the opt out review into increased contribution rates from , suggests that a higher proportion of females and younger firefighters have opted out of their pension scheme than there are members of the scheme. One authority has also provided information (as detailed above) to suggest that a higher proportion of staff from ethnic minority backgrounds has also opted out of the scheme. Opt out review The Government is continually monitoring the effect of pension contribution increases on members including the effect on opt out rates, from 1 April 2012 and April Recent data collected between April to November 2013, shows that, for the two firefighter pension schemes, 88% of firefighters opting out of their pension scheme were male and 12% were female. The two firefighters pension schemes were considered separately: 97% of males and 3% of females opted out of the Firefighters Pension Scheme (1992), 83% of males and 17% of regular female firefighters, and 93% of retained male firefighters opted out of the New Firefighters Pension Scheme (2006). 89% of non-joiners to the New Firefighters Pension Scheme (2006) were male and 11% female however of those regular firefighters choosing not to join the scheme 70% were male and 30% female. Comparisons to the average scheme membership (as set out in section 2 above), suggests that a higher proportion of females, than males, have opted out of their pension scheme or chosen not to join. However, there are relatively few numbers of females in the pension scheme, so it only requires a few females to opt out of the pension scheme to give a larger percentage of female optant outs. The Department has asked authorities to select from a pick list of reasons why firefighters are choosing to leave or not join the pension scheme. Only some authorities have been able to do so, but there is no indication that contribution increases are the sole reason for firefighters opting out or choosing not to join their scheme. The data also showed that, overall, 74% of optant outs were aged 40 or under. 64% of members that opted out of the Firefighters Pension Scheme (1992) were aged 40 or under. 82% of regular firefighter members, and 67% of retained firefighter members, that opted out of the New Firefighters Pension Scheme (2006) were aged 40 or under. 23

18 This compares with the average scheme membership of both firefighters pension schemes where approximately 50% of scheme members are aged 40 or under. In the Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006), 37% and 69% of scheme members, respectively, are aged under 40. This information is based on eight month s data provided from April 2013, following the implementation of the revised contribution increases from 1 April Given that this level of detail has only been collected from the start of , and not historically, and that different people put different value on the importance of a pension, particularly at different ages, it is difficult to compare trends and draw any meaningful conclusions on the impact on contribution increases on sex or age. The Government will continue to monitor and review the impact of contribution increases, being mindful of any impact on the protected groups. 8. When your policies are finally implemented which groups are most likely to benefit? There is no evidence to suggest that one group of individuals with protected characteristics will benefit more than another: One authority has raised concerns that the proposals will impact more on female firefighters or those firefighters from an ethnic minority background. Younger members, who would have entered the service in more recent years and, according to scheme membership and workforce data collected, are more likely to be female or those from an ethnic minority are generally lower paid. Lower paid firefighters will be subject to a smaller percentage point increase in their contributions than higher earners and those members of the 2006 Scheme, who joined the service in recent years, have been afforded some protection in the level of contribution increase they will pay. Higher earners tend to be older, white males so it could also be argued that this group will face bigger contribution increases and therefore younger members will face less of an impact and be more likely to benefit from this policy. However, it is not possible to identify that this is necessarily the case. 9. In considering the above information have any gaps in data or equalities information been identified? The following data gaps have been identified: - Gaps in membership information on race/ethnicity. However, the Department has received some information on race/ethnicity from April Gaps in salary progression for the protected groups 10. Overall, can you make an assessment of the potential of this policy; programme/service to have a substantial equalities impact on discrimination, fostering good relations or advancing equality of opportunity? Please try to limit your answer here to less than an A4 page. There are no identifiable categories of individuals with protected characteristics who are being disproportionately discriminated against. 24

19 This analysis was undertaken by: Sharon Mayers Advice sought from the equalities team Name/Title Hyacinth Parsons Directorate/Unit Equalities Lead contact Team Date March 2014 Date SCS Sign off: Chris Megainey Sharon Mayers March 2014 I have read the available evidence and I am satisfied that this demonstrates compliance, where relevant, with Section 149 of the Equality Act and that due regard has been made to the need to: eliminate unlawful discrimination; advance equality of opportunity; and foster good relations. 25

20 Table 1: Membership of the Firefighters Pension Schemes by Age and Salary Band [Source: Government Actuary Department s Valuation Data 31 March 2012] Table 1a: Regular membership of the Firefighters Pension Scheme 1992 and the New Firefighters Pension Scheme 2006 Under Over 55 Total Full Time Equivalent Salary/Age No. % No. % No. % No. % No. % No. % No. % Up to 30K 2,225 16% 5,217 38% 2,891 21% 2,449 18% 983 7% 93 1% 13, % 30K - 35K 515 7% 2,662 34% 1,953 25% 1,881 24% % 70 1% 7, % 35K - 40K 38 1% % % 1,180 36% % 67 2% 3, % 40K - 50K 2 0% % % % % 19 1% 1, % 50K - 60K 0 0% 49 8% % % % 13 2% % 60K - 100K 0 0% 10 4% 50 19% % 62 24% 11 4% % 100K - 120K 0 0% 1 3% 2 6% 23 64% 9 25% 1 3% % Over 120K 0 0% 0 0% 6 12% 25 49% 17 33% 3 6% % Totals 2,780 10% 8,688 31% 6,277 23% 6,662 24% 2,911 11% 277 1% 27, % 26

21 Table 1b: Retained membership of the New Firefighters Pension Scheme 2006 Under Over 55 Total Full Time Equivalent Salary/Age No. % No. % No. % No. % No. % No. % No. % Up to 30K 1,929 32% 1,884 31% % % 387 6% 169 3% 5, % 30K - 35K 53 4% % % % % 109 9% 1, % 35K - 40K 3 1% 26 9% 51 17% 81 27% 73 24% 64 21% % 40K - 50K 2 9% 5 22% 1 4% 8 35% 6 26% 1 4% % 50K - 60K 3 30% 1 10% 1 10% 2 20% 3 30% 0 0% % 60K - 100K 0 0% 0 0% 1 25% 2 50% 0 0% 1 25% 4 100% 100K - 120K 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 100% Over 120K 0 0% 1 50% 1 50% 0 0% 0 0% 0 0% 2 100% Totals 1,990 26% 2,175 29% 1,255 17% 1,090 14% 700 9% 344 5% 7, % Table 2: Membership of the Firefighters Pension Schemes by Sex and Working Pattern (Full time or Part-time) [Source: Government Actuary Department s Valuation Data 31 March 2012] Full-time regular firefighters Part-time regular firefighters Total regular firefighters Male Female Male Female Male Female Pension Scheme No. % No. % No. % No. % No. No. Firefighters Pension Scheme , % % % % 21, Firefighters Pension Scheme , % % % % 4, Totals 26, % 1, % % % 26,448 1,147 27

22 Table 3: Retained Membership of the New Firefighters Pension Scheme 2006 by Sex and Salary Band Full Time Equivalent Salary Male Female Up to 30K 5, K - 35K 1, K - 40K K - 50K K - 60K K - 100K K - 120K 0 0 Over 120K 2 0 Totals 7,

23 Annex 2: West Yorkshire Fire and Rescue Service (WYFRS) Equality Analysis Wholetime Firefighters Men Women BME White British TOTAL Number Wholetime not in Percentage Wholetime not in out of those eligible 1% 2% 2% 1% RDS and RDS-Wholetime Firefighters Men Women BME White British TOTAL Number RDS and RDS/Wholetime not in Percentage RDS and RDS/Wholetime not in out of those eligible % 14% 0% 31% Total Firefighters Men Women BME White British TOTAL Total number not in Percentage not in out of those eligible 5% 4% 2% 5%

24 OFFICIAL Firefighters' Pension Scheme - Technical Support for Fire and Rescue Authorities Human Resources Committee Date: 5 September 2014 Submitted By: Director of Support Services Agenda Item: 8 Purpose The Local Government Association (LGA) have requested Fire and Rescue Authorities (FRA) to contribute to the funding of Technical Support for the Firefighters Pension Schemes Recommendations That Members note that West Yorkshire Fire and Rescue Authority agrees to contribute to the funding of the Technical Support Post. Summary The Local Government Association has written to Chief Fire Officers requesting that FRAs contribute to provide central Technical Support for the Firefighters Pension Schemes. Local Government (Access to information) Act 1972 Exemption Category: Contact Officer: None Steve Rhodes, Director of Service Support E: steve.rhodes@westyorksfire.gov.uk T: Background papers open to inspection: None Annexes: Annex 1 Letter from LGA Firefighters Pension Schemes Technical Support Annex 2 - Job/ role description 30

25 1 Introduction 1.1 Since the reorganisation of the Department for Communities and Local Government (DCLG) Fire pensions team in 2010, the advice and guidance given to Fire and Rescue Authorities (FRAs) in respect of the administration of the Firefighters Pension Schemes (FPS) has been significantly reduced. Bulletins and circulars that kept FRAs up-to-date about the FPS and the implications of wider pensions/tax changes are no longer produced. 2 Information 2.1 In May 2014 the Local Government Association (LGA) wrote to Chief Fire Officers (CFO) identifying that it was ideally suited to take on a central support role for FRAs in a similar way that it currently does for the Teachers Pension Scheme and Local Government Pension Scheme. 2.2 The LGA had sought funding from DCLG for a technical post to support FRAs; this bid was not successful, the LGA are therefore looking to fund the technical post in another way. 2.3 The LGA are proposing to set up a subscription service to pool funding from FRAs for a technical post within the LGA to support FRAs, akin to the subscription arrangements in place with local authorities in respect of the Local Government Pension Scheme. 2.4 The subscription fee would be based on the number of employees in each FRA that are eligible to be a member of one of the Firefighters Pension Schemes; the fee for 2014/15 would be at a cost of approximately 1 per employee. It should be noted that the indicative per head cost of the service provided would be dependent on all FRAs subscribing to the service, therefore this figure may increase. 2.5 On 9 June 2014 Management Board responded to the request, agreeing to subscribe to contributing towards the post of FRA Technical Support. 2.6 On 9 June 2014 WYFRA had 1346 employees eligible to join a Firefighters Pension Scheme. 2.7 On 11 August 2014 the LGA wrote to FRA Chairs and CFOs updating them in relation to the response they had received from FRSs, stating that Given all but one FRS responded positively that such support would be welcomed and committed to share the cost, we have now moved into the recruitment phase in order to put in place support for those FRSs as soon as possible. The shortfall in funding for 2014/15 will be met by the LGA. 2.8 The post is currently being advertised on the websites below and circulated through the various contact groups known to the LGA pensions team /from/xq9kwg50irb4l/1/of/1/score/desc?highlight=firefighters+pensions+adviser 31

26 3 Financial Implications 3.1 The anticipated cost will be approximately 1300 per year based on the current strength. However it is considered that it would have been more equitable to share the costs equally among all fire authorities rather than allocating on the basis of the number of fire fighters. 4 Equality and Diversity Implications 4.1 Central technical support should assist in ensuring a higher degree of consistency across FRAs when dealing with pension matters. 5 Health and Safety Implications 5.1 There are no Health and Safety implications arising from this report. 6 Service Plan Links 6.1 This report supports the Service Plan objective to Provide effective and ethical governance and achieve value for money in managing resources. 7 Conclusions 7.1 The administration and management of the Firefighters Pension Schemes is becoming increasingly complex and technical. The support provided by DCLG has reduced following a restructure in The Local Government Association has made proposals to assist FRAs and WYFRA would greatly benefit from an increased level of central technical support. 7.2 The costs associated with providing the post will be outweighed by WYFRA s ability to manage pension-related issues in a more effective and efficient manner. 32

27 BY 23 rd May 2014 Dear Chief Fire Officer, Firefighters Pensions - Technical support for Fire and Rescue authorities Since the reorganisation of the DCLG Fire pensions team in 2010, the advice and guidance given to Fire and Rescue Authorities (FRAs) in respect of the administration of the Firefighters Pension Schemes (FPS) has been significantly reduced. Whilst a technical working group and an online discussion forum have been set up for scheme administrators to discuss issues relating to the FPS, this has not provided a solution for individual, complicated technical queries and issues across FRAs. Bulletins and circulars that kept FRAs up-to-date about the FPS and the implications of wider pensions /tax changes are no longer produced. The resource to do so is particularly important given the forthcoming new scheme next year; there is a real danger of FRAs pensions administration functions becoming isolated both from each other and from any central support. The potential for the inconsistent application of both the current and new schemes with all of the confusion, complaint and cost that would result is not insignificant. It is clear that there needs to be an increased level of central support and direction for FRAs in their role as administrators of the FPS. The LGA already provides such a function for both the Teachers Pension Scheme and Local Government Pension Scheme and is therefore experienced in its provision. Furthermore as the LGA represents FRAs in national discussions, it is ideally suited to undertake this task and by becoming part of the LGA pensions team, there would also be the opportunity to draw on the team s wide experience and resources where required. You may be aware that the LGA has been in discussion with DCLG to seek funding for a technical post to support FRAs; we have now been advised that we have not been successful in securing DCLG funding and are therefore looking to fund the technical post in another way. We are proposing to set up a subscription service to pool funding from FRAs for a technical post at the LGA to support FRAs, akin to the subscription arrangements in place with local authorities in respect of the Local Government Pension Scheme. Please note that the indicative per head cost of the service provided would be dependent on all FRAs subscribing to the service. The subscription fee would be based on the number of employees in your FRA that are eligible to be a member of one of the Firefighters Pension Schemes; the fee for 2014/15 would be at a cost of approximately 1 per employee. Our intention is for the full-time post to commence as soon as possible until the end of March 2015 when we will be looking at ways to make this a permanent post using some of the funding that all Fire Authorities will be required by statute to provide for governance arrangements. As you will see from the attached information in respect of job purpose and role responsibilities, the post will include involvement in setting up the governance 33