Agenda item

To consider Item 6

The Lead Member for Finance and Assets, Information Security and IT introduced the report and advised Members that there had been changes since the report was written and asked the Director of Finance and Assets to take Members through the changes.

The Director of Finance and Assets advised that firstly he would give Members some background into the changes and the revised recommendations which were on the new page (in front of them).

The Director of Finance and Assets also advised Members that there were some officers at the meeting within the scope of this report, who did not need to declare an interest, but he wanted Members to be aware that some officers present were affected.

The Director of Finance and Assets advised that this report gave the latest position regarding immediate detriment. Essentially, it applied to operational staff who were on the old scheme and transferred into the new scheme between 1 April 2015 and 31 March 2022. At the March meeting of the Executive Committee, based on guidance and legal opinion, the Committee determined to treat those that were due to retire as if they had never left their old scheme. Since then, there had been some further legal cases against London and Nottinghamshire fire and rescue services and as a result, the Local Government Association (LGA) and Fire Brigades Union (FBU) had agreed a framework to enable the Service to deal with McCloud and Sargeant cases.

The Service was already dealing with category one cases - people due to retire, and in this respect the framework had helped to make sure they were treated consistently, across all Services. It also identified category two cases - people who had already retired and would have been transferred to the new scheme before they retired. Eventually, all cases would have to be revisited when legislation was laid.

The Director of Finance and Assets advised Members that since the report was published, HMRC had published new proposals for tax. The main change introduced was that if members got a lump sum more than twelve months after they retired, it was subject to what’s called an ‘Unauthorised Scheme Sanction Charge’, but from 6 April 2022, it would no longer apply. Therefore, the recommendations had changed slightly, as it would be beneficial for some members to wait slightly longer than the timescales in the framework, to make those payments to people who retired more than 12 months ago.

The Director of Finance and Assets also updated Members on the number of cases. Within the report it stated there were thirty cases, which was based on the total number of people who had retired since 1 April 2015 but weren’t fully protected members. Some further investigation had been undertaken, and of those thirty people, just over half retired before they tapered across, so would not be subject to immediate detriment, as they already had the correct benefits. Of the remaining thirteen cases, six were ill health retirement, and in terms of priority, would be treated first as they had no choice as to whether they retired or not. The other seven cases would be deferred until after 6 April 2022 to avoid any charges.

A Member asked how relevant costs would be captured both locally and nationally to support any case to the government for funding.

The Director of Finance and Assets responded by saying that there had been a slight discrepancy between the LGA and the Home Office as to what was charged and when, so the full cost would not be known until the legislation was implemented in October 2023, so it was important to keep a record of all costs. The majority of costs being incurred were simply costs that had been brought forward.

A Member asked what assurances the Authority had received from the Pensions Administrators regarding their capacity to process cases in accordance with the timeline in the framework.

The Director of Finance and Assets responded by saying that this was a question that had been posed to West Yorkshire the Pension Administrator at the local pension board meeting, because West Yorkshire not only administer this Authority’s pension scheme, but they also do so for a number of other fire and rescue services. West Yorkshire had said they would do their best to meet the timescales, but they could not guarantee it, simply because of the number of cases they had to deal with.

The Chairman asked that by proposing to undertake the ill health pensions first, would these members be caught out with the HMRC cut-off date, of 6 April 2022.

The Director of Finance and Assets responded by saying that any charges these members would incur as a result of the HMRC rules would be compensated for, and the members would not be disadvantaged.

A Member appreciated that although the financial impact could not be determined at this time, was there a risk that the financial impact might be a major one further down the line.

The Director of Finance and Assets responded by saying that primarily it would be a cash flow issue as the Authority would be bringing forward amounts that would have been paid anyway. With the ill health retirements, it was on a case by case basis. In some cases, they were actually better off being on the new scheme and there would be no payments to be made to those members.

A Member asked were there any previous firefighters who may have passed away during this time, but still have to go through this process. Would their cases be prioritised and would they get penalised in terms of the HMRC rules.

The Director of Finance and Assets responded by saying he was not aware of any cases that fall into that category, but if there were, they would be looked at as a priority and again if there were any charges the Authority would look to compensate that member.

The Chairman asked that the Director of Finance and Assets keep the Lead Member for Finance and Assets, Information Security and IT fully briefed on this matter.

RESOLVED –

1.               That the Immediate Detriment Framework be adopted on behalf of the Authority (the Scheme Manager of the Authority’s firefighter pension schemes).

2.               That the Director of Finance and Assets be:

(a)   the authorised signatory for any ‘Record of Agreed Compensation and Remedy’ (‘Compensation Record’) on behalf of the Authority; and

(b)   authorised to agree with Scheme members variations to the timescales for dates of payments when in the interests of the Scheme Manager and the Scheme member to do so.