DN 06/2022 – North Yorkshire Police, Fire and Crime Commissioner Fire and Rescue Authority: temporary suspension of compliance with the LGA/FBU Framework on immediate detriment regarding pension remedy
DN 06/2022 Date 06/05/2022
The Commissioner, as Employer and Scheme Manager of the Fire and Rescue Authority’s firefighter pension schemes, has decided to suspend the operation of the Memorandum of Understanding and the Framework recently agreed between the Local Government Association (LGA) and the Fire Brigades Union (FBU), to offer (on request) Immediate Detriment to qualifying firefighter pension scheme members. This supersedes the Authority’s interim policy statement published on 17 September 2021 and the decision set out in Decision Notice 19/2021.
This pause follows the withdrawal of Government support for processing immediate detriment cases. The Commissioner intends to make vigorous representations to Government about the financial uncertainty that this creates for individual pensioners and Authorities, and to encourage Government to legislate urgently to address the issue, as well as to restore support for processing cases in the meantime.
In line with DN 19/2021, the following is the overall background summary to this subject matter:
- In 2015 most public service pension schemes, including the Firefighters’ Pension Scheme (FPS), were reformed. These reforms included ‘transitional protection’ for people closest to retirement.
- In 2018, the Court of Appeal ruled that the transitional protection element of the 2015 public service pension reforms constituted unlawful age discrimination in the Firefighters’ and Judges’ Pension Schemes.
- On 17 September 2021, the North Yorkshire Police, Fire and Crime Commissioner Fire and Rescue Authority (‘the Authority’) implemented an interim policy in line with Home Office Guidance that sought (amongst other matters) to provide members with an active and viable choice of which scheme they would like to be in remedy for the remedy period, defined as between 1 April 2015 and March 2022.
- On 8 October 2021, the LGA and FBU issued a Memorandum of Understanding (MOU) and Framework (appended) setting out a mechanism for handling Immediate Detriment cases, to help ensure a consistent approach to Immediate Detriment across the fire sector and resolve the genuine difficulties that had arisen for fire and rescue authorities in making payments to those affected (including for example issues around unauthorised payment charges and contribution holidays).
On 8 November 2021, the Authority agreed to adopt the MOU and Framework with immediate effect – this is set out in DN 19/2021.
DN 19/2021 made clear that at the time of adoption, there were no known factors affecting the ability of the Authority to comply with the terms and spirit of the MOU and Framework, even though they were agreed by the LGA and FBU without the Authority’s involvement.
However, on 29 November 2021, the Home Office withdrew its informal, non-statutory guidance on processing immediate detriment cases ahead of legislation.
This places the Authority in a position where
- There is appreciable doubt about the legal power of the Authority to make pension payments to make good ‘immediate detriment’ entitlements where they are established; and/or
- There is no certainty that the Authority could meet the cost of such payments from the pension fund; this in turn creates a potential exposure to the Authority’s general fund which the Authority is not in a position to bear.
Since that time, the Authority has received specialist advice and its statutory officers (the s151 Chief Finance Officer and the Monitoring Officer) have arrived at a professional assessment.
It is their collective assessment that the only option available to the Authority is to temporarily suspend the processing of claims for immediate detriment and therefore also suspend compliance with the MOU and Framework. This assessment will be revisited immediately, should a material change come about – such as additional risk coming to light, further specialist advice being available to the sector, fresh guidance on the part of HM Government, a court order or the enacting of legislation to address the issue.
There are unintended consequential risks arising from this recommendation, some of which it is possible for the Authority to contemplate at the time of this Decision Notice. It is important that these are set out and addressed as far as it is possible to do so at this time. These include but may not be limited to
- The risk of litigation and/or regulatory challenge – such as court action, or the pursuit of dispute resolution under the Pensions Act procedures.
- Uncertainty for retired officers and for those approaching retirement.
Whilst it is not possible to set out publicly how the Authority will address the detail of litigation or challenge, it will undertake to respond to any such challenge constructively, sensitively and in the public interest. The Authority will also use its best endeavours to ensure that wellbeing support is available to any officer affected by the resulting uncertainty, should such support be requested.
Other risks may arise in future, which as mentioned above may cause the statutory officers to revise their assessment and to advise the Authority to revisit this decision as appropriate.
The recommendation set out in this Decision Notice aligns with the most recent stance recommended by the National Fire Chiefs’ Council and by HM Treasury, in correspondence which has been shared with the Authority.
It follows that the statutory officers advise the Authority to adopt the recommendation set out in this Decision Notice.
The Commissioner is acutely concerned for the uncertainty caused to individual pensioners and to the Authority. In neither case has this issue arisen due to fault of their own. The Commissioner has indicated that it is her intention to make vigorous representations to Government, encouraging urgent resolution of this issue and the restoration of support relieving individual authorities of the need to address potential entitlements as they arise.
The Commissioner has decided to suspend compliance with the MOU and the Framework pending (a) the outcome of correspondence with Government and (b) further advice from the Chief Finance Officer and the Monitoring Officer.
Police, Fire and Crime Commissioner for North Yorkshire
Statutory Officer Advice
Legal, Management and Equality Implications
The Commissioner’s Chief Executive and Monitoring Officer, having read this report and having considered such information as has been provided at the time of being asked to express this view, is satisfied that this report does not ask the Commissioner to make a decision which would (or would be likely to) give rise to a contravention of the law. However, for the reasons set out in this Decision Notice, this decision does give rise to an increased likelihood of challenge and if so, there will be a need to respond to litigation or regulatory procedure. This risk is an inherent feature of the decision and arises as a result of the withdrawal, by government, of the non-statutory guidance which underpinned DN 19/2021.
Financial and Commercial
On 29 November 2021, the Home Office withdrew its informal and non-statutory guidance on processing certain kinds of immediate detriment cases ahead of legislation, with immediate effect. As a result of this, and based on my role at the S151 Officer for the Fire Authority, it is my assessment that, without this guidance being in place, and based also on the Treasury guidance on this matter, I recommend that we review the previous position on the processing of immediate detriment cases and pause these until the necessary legislation is put in place.
Amongst many concerns, those that cause me most concern relate to the ability/power of the Authority to make pension payments that are outside of the agreed Pension regulations. I am not convinced that the Authority has the power to do so and also not convinced that if the Authority was to do so that they could be charged to the pension fund. As such the potential liability to the ‘General Fund’ of the Authority as opposed to the ‘Pension Fund’ is too significant to consider processing any Pensions that are not as per the current legislation.
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