The FPS 2006 is a final salary scheme, meaning that your pension is based on your scheme membership (pensionable service) and final pensionable pay:
Pensionable service x final pensionable pay ÷ 60 (accrual rate) = Annual pension
What is pensionable service?
This is your service as a member of the scheme for which you have paid contributions. If your hours of employment are less than whole-time, the calendar or "qualifying" length of service would be adjusted to reflect your part-time hours. For example, if you work half-time and have completed six calendar years of service, your pensionable service will be three years.
Other periods may count as pensionable service. For example, service transferred in from another pension scheme, unpaid leave (including additional maternity, paternity, and adoption leave) for which contributions have been paid, or service which previously counted towards a pension which has since been cancelled. Added years paid for by additional contributions would also be included in the assessment of pension.
For each year of pensionable service, you will get 1/60th of final pensionable pay. Each day of pensionable service will count as 1/365th of 1/60th.
The maximum pensionable service that can be built up is 45 years.
Because retained firefighters do not work a fixed number of hours, pensionable service is worked out based on pay.
The actual pensionable pay received is compared with the pay that would have been received over the same period by a whole-time regular firefighter in the same role and with similar service (the "reference pay"). The comparison is usually done for scheme year (1 April to 31 March) during the firefighter's membership and this gives the pensionable service which will count in each year.
Suppose a retained firefighter worked for 3 scheme years – from 1 April 2012 to 31 March 2015. Assume the pay of a whole-time regular firefighter in a similar role over the same 3 year period was –
1.4.2012 to 30.6.2012 = £24,000
1.7.2012 to 30.6.2013 = £26,000
1.7.2013 to 30.6.2014 = £28,000
1.7.2014 to 30.6.2015 = £30,000
These rates of pay would be the starting point for working out the retained firefighter's pensionable service. Next we need to break down these rates of pay to show how much would actually have been received by the whole-time regular firefighter within each of the scheme years –
Year 1:
1.4.2012 to 30.6.2012: 91/365 x £24,000 = £5,983.56
1.7.2012 to 31.3.2013: 274/365 x £26,000 = £19,517.81
£25,501.37
Year 2:
1.4.2013 to 30.6.2013: 91/365 x £26,000 = £6,482.19
1.7.2013 to 31.3.2014: 274/365 x £28,000 = £21,019.18
£27,501.37
Year 3:
1.4.2014 to 30.6.2014: 91/365 x £28,000 = £6,980.82
1.7.2014 to 31.3.2015: 274/365 x £30,000 = £22,520.55
£29,501.37
Then the pensionable pay received by the retained firefighter has to be established. For this example, let's suppose pay records show that the pensionable pay received by the retained firefighter was –
Year 1: £6,429.12
Year 2: £4,132.56
Year 3: £8,528.21
To work out the service credit for each year, we divide the pensionable pay received by the retained firefighter by the pensionable pay received by the whole-time regular firefighter –
Year 1: £6,429.12/£25,501.37 = 0.2521 of a year
Year 2: £4,132.56/£27,501.37 = 0.1503 of a year
Year 3: £8,528.21/£29,501.37 = 0.2891 of a year
Total: 0.6915 years' pensionable service
The pensionable service used in the pension calculation is 0.6915 years (approximately 252 days).
What is final pensionable pay?
In most cases this will be your pensionable pay averaged over the last 365 days of pensionable service. It would not include those payments which have been treated as pensionable for providing Additional Pension Benefits (APBs).
You can use the best of the last 3 years pay to work out your pension benefits. This protects your pension if you have a reduction in pay in your last couple of years' service. If you have a reduction in pay earlier on in your service, the two pension option could help you.
If your hours of employment are less than whole-time, although your pensionable service will be adjusted to reflect your hours, the final pensionable pay used to work out the pension will be the final pensionable pay you would have counted if you were whole-time.
To make sure that retained firefighters are treated equally to part-time and whole-time regular firefighters, the pensionable pay used to work out the pension for a retained firefighter will be the final pensionable pay that would have been used for a regular whole-time firefighter in a similar role and with similar qualifying service (the reference pay).
In most cases this would be the whole-time pensionable pay averaged over the last 365 days of pensionable service.
You can use the best of the last 3 years pay to work out your pension benefits. This protects your pension if you have a reduction in pay in your last couple of years' service. If you have a reduction in pay earlier on in your service, the two pension option could help you.