These notes relate to deferred benefits within the ‘standard’ section of FPS 2006; if you hold deferred benefits within the ‘retained modified’ section of FPS 2006, please visit the ‘Deferred Benefits’ page within the retained modified area.
Your benefits will be deferred if you no longer work for the fire service, and your benefits have not yet come into payment. Or, you may still be employed by your Fire & Rescue Authority, but decided to opt-out of the pension scheme and didn’t qualify for a refund of pension contributions.
Deferred FPS 2006 pensions from the standard section are payable from age 65 unless you become permanently incapable, due to ill health, of undertaking any regular employment. Where this applies, the deferred pension will be paid, in full, immediately.
You may, on or after your 55th birthday, by written notice to the Fire & Rescue Authority request early payment of your deferred pension; subject to actuarial reductions.
At retirement, you have the option to receive a lump sum; you can commute (convert) up to one quarter of your pension in exchange for a lump sum. You will receive £12 of lump sum for every £1 of pension commuted.
Under HMRC rules, the maximum amount of tax free lump sum is restricted to 25% of the capital value of the pension benefits. If, when you retire, your lump sum exceeds the HMRC allowance, the excess amount will incur tax charges. We will advise you at retirement, if you exceed this limit. This is calculated using the formula:
[20 x pension + lump sum] divided by 4
To avoid any tax charges a notice of commutation must be given no earlier than 4 months before and no later than the day before your intended retirement date.
Please note: The annual deferred statement do not include details of the commuted lump sum (other than referring to it is an option at retirement to commute some of the pension to receive one). As the factors governing commuted lump sum can change with little, or no, advance notice, we believe it imprudent to quote a lump sum figure that could be very different from the actual amount at retirement.
The FPS has to comply with rules set by HMRC. There are, for example, limits on the amount of pension and lump sum which can be taken by a pension scheme member before tax charges apply. When benefits are due the total value must be tested against the lifetime allowance, which is set annually. If the value exceeds this limit (currently £1.03 million), tax will be deducted and paid over to HMRC. This test is in respect of all pension benefits you may have accrued over your working life, not just FPS. You will be asked to provide statements in respect of any other pensions you may have so we can check for breaches before making payment. For more information visit: www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm080000.
FPS 2006 benefits are designed to keep pace with inflation and are index linked every April, both in deferment and after they come into payment. FPS 2006 benefits are designed to keep pace with inflation and are index linked every April, both in deferment and after they come into payment. Deferred FPS 2006 benefits increased by 3% in April 2018, as this was the measure of increase identified by the Consumer Prices Index (CPI) in the year to September 2017. If you left the pension scheme during 2017/18, the benefits shown will include the proportion of the 3% increase to which you are entitled to for this first year.
You should be aware that there may be time limits that apply. The regulations allow benefits to be transferred to another pension scheme, providing the election to transfer is signed no later than your 64th birthday. Please be aware, however, that the new scheme may have timescales of their own, particularly if it is another public sector pension scheme. If this is the case, an election to transfer must be made within 12 months of becoming eligible to join the new scheme otherwise you will lose the right to preferential terms. It is therefore important that if you are considering a transfer of your deferred benefits, you need to contact your new pension provider as soon as possible to confirm eligibility to transfer and associated timescales.
If you die before your benefits come into payment, there are benefits payable to eligible dependants. Survivors’ benefits are the same following the death of either a standard or modified deferred member.
Details of the pensions payable to adult survivors, as well as children, can be found in the ‘Death Benefits’
area, but in brief FPS 2006 pays dependants’ pensions to spouses, civil partners and nominated cohabiting partners (who meets the criteria to receive a partner’s pension) equal to half of your deferred pension (albeit pensions for civil partners and nominated partners will be based on your service from April 1988 only).
Please note: the unmarried partner’s nomination form is available within the‘Death Benefits’
pages. Whilst it is no longer a requirement for this form to be completed, it is a useful document in that it informs XPS that a partner exists (assuming your circumstances haven’t changed since the form was completed!). Entitlement to a partner’s pension will be determined following your death. Details of the criteria to be met are quoted on the form.
FPS 2006 does not pay a death grant (lump sum) following the death of a deferred member.
If a court has issued a Pension Sharing Order, your pension benefits are reduced to reflect the percentage of your pension rights allocated to your ex-spouse.
As an alternative, a court could issue an Earmarking Order, that also awards pension rights to an ex-spouse, but these do not take effect until your benefits come into payment, and is therefore not taken into account in the annual benefit statements we produce.
If you re-join the fire service (or recommence pension contributions if you had remained in service but had opted-out of the pension scheme) you will be eligible to re-join FPS 2006, or will become a member of FPS 2015, depending on your age and how long ago it was since you left FPS 2006.