Members of the Firefighters' Pension Scheme (FPS) are generally entitled to take a transfer value to another pension arrangement. Where the new pension scheme is another scheme that participates in the Public Sector Transfer Club, the transfer will normally be effected on Club terms.
The Public Sector Transfer Club Memorandum by the Cabinet Office ('the Club Memorandum') sets out how pension credits and the Club transfer out payment should be calculated. This guidance should be used in combination with the approach set out in the Club Memorandum.
The Firefighters' Pension Scheme Regulations 1992 define the circumstances under which a member is entitled to take a transfer value. Members with over three months of qualifying service would generally be entitled to a transfer value. Members with less than three months of qualifying service would normally be entitled to a refund of contributions.
The relevant date for calculating a transfer value is the "guarantee date" as defined in The Occupational Pensions Schemes (Transfer Values) Regulations 1996, i.e. it must be within 3 months (or exceptionally 6 months) of the date of the member's application.
The benefits to be valued for serving firefighters are those that would be payable if the member had left service on the date of the calculation.
The benefits to be valued for a deferred member should include revaluation to the guarantee date. The accrued pension benefits should be calculated at the last day of service, and then increased in line with Pensions Increase (Review) Orders.
The factor for the survivor's pension does not depend on whether or not the member has a partner who would qualify for a survivor's pension in the event of the member's death.
For active and deferred members entitled to deferred benefits from age 60 the transfer value should be calculated using the following formulae:
Club element
Calculated in line with the Club Memorandum. The factors tables used in the calculation should be taken from table 2 of the Club Memorandum (a consolidated factor workbook for the Club Memorandum can be found at GAD Factors Guidance Hub Factors Guidance Hub | CLUB factors tables).
Non-Club element
APBpen × GP+APBsur × Gsur
Where:
APBpen Additional pension from Continuous Professional Development (CPD) contributions or Long Service Increments (LSI)
APBsur Additional pension payable on the death of the member to their spouse or partner from CPD contributions or LSI
GP Non-Club factor for member's pension - from Table 201 or 202
Gsur Non-Club factor for survivor's pension - from Table 201 or 202
Adjustment for market conditions (AMC) factors no longer apply to Club transfers from 1 January 2012; however, some schemes may find it easier to retain an AMC table but based on factors of 1.00 for all yields and ages. Similarly, Club transfers that were calculated before 1 March 2017 were adjusted to take account of GMPs and National Insurance modification. The tables of factors effective from that date no longer include any factors for GMP or National Insurance modification adjustments. As with the AMC factors, some schemes may find it easier to retain GMP and National Insurance modification factors, in which the factor will be 0.00 in all cases.
The transfer value should be calculated in two stages. First, a gross transfer value should be calculated ignoring the pension debit. Second, the value of the pension debit should be calculated (i.e. the transfer value of a deferred pension of the same amount as the debit). The results of both calculations should be passed to the receiving scheme. The transfer value paid is the net amount: the gross transfer value less the value of the pension debit.
In some circumstances a statutory CETV (non-Club) transfer may produce a higher service credit for the member in the receiving scheme than a Club transfer. On responding to a request for a Club transfer value, the fire pension administrator should suggest to the administrator of the receiving scheme that they alert the member to the possibility that the statutory CETV route could, in some circumstances, result in a higher service credit. It would then be for the member to consider acting on the information by requesting a statutory CETV quotation from FPS. Such cases are expected to be infrequent and are most likely to arise when an individual has taken a large drop in salary when moving.
A member is entitled to a split pension if, on changing role, they have suffered a reduction in pay, or for those who stay in the same role but become entitled to a different rate of pay which impacts adversely on pensionable pay at the point of retirement. In accordance with this rule, two pension calculations should be carried out, the first allowing for a split award and the payment of two pensions and the second as a single award. The greater of the two pension values should be used in the calculation of the transfer value.
A statutory CETV (i.e. non-Club transfer value) should be calculated using the following formula. If the member has received a transfer in from another scheme, then an underpin applies to the statutory CETV, as described in Underpin in respect of previous transfer in.
Statutory CETV = (CP + APBpen) x FP + (SUR + APBsur) x Fsur - NI x Fni
Where:
CP = member's pension
APBpen = additional pension from CPD contributions or LSI
SUR = pension payable on the death of the member to their spouse or partner
APBsur = additional pension payable on the death of the member to their spouse or partner from CPD contributions or LSI
NI = annual amount that will be deducted at State pensionable age due to NI modification
FP = factor for member's pension - Table 201 or 202
Fsur = factor for survivor's pension - Table 201 or 202
Fni = factor for NI modification - Table 201 or 202
If the member has received a transfer in of benefits from another scheme, then an underpin applies to the CETV. The underpin is calculated using the following formula:
Underpin = TVActSer + TVin
Where:
TVActSer = the transfer value based on actual service, calculated in accordance with the paragraphs below
TVin = the value of the previous transfer in, calculated in accordance with the paragraphs below
The transfer value based on actual service is calculated in accordance with Statutory CETV Transfer Out, but the value of the benefits is based on reckonable service in the FPS ignoring any service credit in respect of the previous transfer in. The member's pension (CP) and the pension payable on the death of the member to their spouse or partner (SUR) should be recalculated using the lower service figure.
The value of transferred in service TVin is usually the total of previous transfer values received by the fire pension administrator but there are some exceptions. The value to use for different type of transfer in are as follows:
- where the transfer in was a statutory CETV (i.e. non-Club) transfer, TVin is the transfer value that was received
- where the transfer in was a Club transfer, TVin is the transfer value that was received
- where the transfer in was from a bulk transfer into the FPS, TVin is the CETV that would have been available from the member's previous scheme at the date of transfer
If more than one transfer in has been received, TVin should be the sum of the specified figures for all the transfers received.
If the underpin calculated in Underpin in respect of previous transfer in is greater than the transfer value calculated in Statutory CETV Transfer Out, then the transfer value should be increased so that it equals the underpin.
We understand that there is no requirement to provide the value of the GMP on transfer values and therefore we have not included the calculation methodology or factors in this guidance. Please contact GAD if a GMP value is required for a particular case.
If a pension debit member requests a statutory CETV, the member's benefits should be calculated as at the guarantee date, initially ignoring the pension debit. The pension debit should be revalued to the guarantee date and deducted from the member's benefits. The transfer value quotation should be based on the benefits after subtraction of the debit.
For transfers between fire authorities in the same country i.e. transfers from one Welsh authority to another, the member's service record should be transferred but there is no requirement to calculate a transfer value or to make a transfer payment. Transfers to fire authorities in another country i.e. from Wales to another authority in Scotland, England and Northern Ireland require the calculation and payment of a transfer value. The member's service should be transferred. The calculation of a service credit is not required.
