Benefits put into payment under FPS 2015 are increased in accordance with Pensions (Increase) Acts and Orders. Any increase due is paid with immediate effect on ill-health pensions and pensions for surviving partners and eligible children.
Otherwise, it would be put into payment at or after the age of 55. In the case of deferred benefits, the increase would accrue from the day after the date of leaving the FPS 2015 and paid along with the deferred pension.
Pensions are usually paid in arrears in monthly instalments by the fire and rescue authority. Lump sums by commutation are paid as soon as possible by the authority.
Payment of pensions from active memberships
Normal pension age
If the pension is payable at normal pension age, an active member must make a claim to receive payment. If the claim is received before employment ends, payment will begin on the day after official retirement.
If a claim is not received before employment has concluded, the pension payments will begin once the claim has been made. The authority will notify the member of this date.
Employer initiated retirement
Where an active member is entitled to pension on employer initiated retirement, the pension is payable from the day after scheme employment has ended.
If the member has opted for the partial retirement option, the pension is payable from the day after partial retirement begins.
For ill-health retirement, the first period of pay will begin once the member’s scheme employment has been terminated.
Payment of a deferred pension
A deferred pension can be paid provided that the member has both reached differed pension age and has claimed for payment. It can be deferred further or paid earlier at the member’s request, however please note that there will be a reduction on early payments.
If a request is made for early payment on ill-health grounds and the authority has agreed to this, payments will commence once all ill-health payment requirements have been met.
If this date cannot be established, payments will commence from a date chosen by the member.
Payment of survivor pensions
Pensions for a surviving partner and eligible children will be paid from the day after the member’s death. In the case of an eligible child born after the death of the member, payment would commence from when the child is born.
If a child is below the age of 18, the authority will decide who should receive the payments. Please note that the authority’s instructions will be based on valid claims and implemented for the benefit of the child.
If the authority is made aware of an additional child who has a valid claim after pensions have been awarded and apportioned between eligible children (including a child born after the member’s death), the authority may make retrospective adjustments to the payments.
There may be a situation where a person, other than an eligible child, is incapable of managing their affairs because of mental incapacity. If the authority recognises this as an issue the pension may be paid to a carer or to someone who can apply and supervise the benefit for the person concerned.
Alternatively, the authority may determine another way in which the benefits should be applied.
Nomination of a death benefit
You can nominate who you would like to receive the lump sum death benefit, but the authority has absolute discretion as to the recipient(s). This includes legal personal representatives as named in Grant of Probate or Letters of Administration.
Payment of small pensions
If only a small pension is payable and is less than the limits set by HM Revenue and Customs, the authority may commute the pension to a lump sum. This would be subject to certain other requirements of the tax rules being satisfied (e.g. the age of the pensioner).
Alternatively, the authority may decide to pay a small pension at less frequent intervals than the intervals of larger pensions.
Effect of tax rules
FPS 2015 must comply with rules set by HM Revenue and Customs. For example, there are limits on the amount of pension and lump sum that can be taken by a pension scheme member before tax charges apply.
The two main limit are the ‘annual allowance’ and the ‘lifetime allowance’.
The growth in value of your pension each year (based on a “pension input period”) must be compared with an annual limit set by HM Treasury. If the value exceeds the limit, tax would be due, payable through self-assessment.
If not, you could elect that the authority should make the payment on your behalf and collect the sum due from your benefit entitlement (this is referred to as the “scheme pays” method).
When benefits are due, the total value must be tested against the lifetime allowance, which is set annually. If the value exceeds the limit, tax will be deducted by the authority and paid over to HM Revenue and Customs.
The testing of the value of benefits is in respect of all pension benefits you may have accrued, including from arrangements other than FPS 2015.
Consequently the authority will ask you to provide statements in respect of any other pension arrangement you may have, so that they can check the total value of benefits before making payment from the Scheme.
The authority can give you more details of the way in which tax rules work, how benefits are valued, current limits and the tax chargeable.