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Pensions

Volume 451: debated on Wednesday 8 November 2006

To ask the Secretary of State for Communities and Local Government (1) what the arrangements are for the payment of pensions to people who retire early through ill-health for each pension scheme for which her Department is responsible; what the incidence of ill-health retirement was as a percentage of all retirement in such schemes in each year since 1988-89; and if she will make a statement; (96022)

(2) what the current rate of ill-health retirement is for each public sector pension scheme for which her Department is responsible; and if she will make a statement.

The information is as follows.

Local Government Pension Scheme

Under the current provisions of the Local Government Pension Scheme in England and Wales, ill-health retirement benefits are paid to scheme members who cease a local government, or comparable employment, by reason of permanent ill-health or infirmity of mind or body. The benefits are enhanced incrementally depending on the length of scheme membership.

The incidence of ill-health retirement in the scheme, as a percentage of all retirements since 2000-01 is shown in the following table. Information before 2000-01 is not held centrally.

Ill-health retirements

All retirements

Ill-health retirements as percentage of total

2000-01

10,611

41,360

26

2001-02

9,805

36,741

27

2002-03

7,515

34,855

22

2003-04

6,784

37,373

18

2004-05

6,079

38,964

16

2005-06

5,213

40,083

13+

Firefighters Pension Scheme

Prior to September 2004, a member of the Firefighters Pension Scheme 1992 was entitled to an ill-health retirement pension if permanently disabled from engaging in firefighting. Thereafter, the scheme was amended to limit the entitlement to a person who is permanently unfit for engaging in firefighting or performing other duties appropriate to his role as a firefighter, other than or in addition to engaging in firefighting.

The 1992 Pension Scheme was further amended in July 2006 to introduce two tier ill-health retirement arrangements. A person is entitled to an upper tier award if incapable of undertaking regular work. Regular employment is defined as meaning employment for 30 hours a week on average over a period of not less than 12 consecutive months. The accrued pension is enhanced. The pension of a person with a lower tier award is not enhanced.

Similar provisions will apply in the New Firefighters Pension Scheme 2006.

In the period 1994-99, the incidence of ill-health retirements as a percentage of all retirements was 68 per cent. From 1999-2000 to 2004-05 the figures were as shown as follows. Figures for 2005-06 are not yet available.

It is expected that due to the scheme amendments outlined above, figures for 2005-06 and 2006-07 will show a continuing substantial decline.

Ill-health retirements for regular firefighters in England

Ill-health retirements

Percentage

1999-2000

547

51.7

2000-01

565

54.5

2001-02

437

43.7

2002-03

554

42.8

2003-04

485

46.5

2004-05

323

24.7

To ask the Secretary of State for Communities and Local Government (1) what the (a) present and (b) future retirement age arrangements are for each public sector pension scheme for which her Department has responsibility; and if she will make a statement; (96029)

(2) what the current (a) accrual rate and (b) normal retirement age is for each public sector pension scheme for which her Department is responsible; and if she will make a statement.

The normal retirement age in the Local Government Pension Scheme is 65. Members can choose to retire early without employer consent from age 60, or with employer consent between 50 and 60, and in these cases the pension may be subject to actuarial reduction. From age 50 pension can also come into payment on grounds of efficiency or redundancy. The scheme also provides for pension on grounds of ill health at any age once the qualification test is satisfied.

The normal pension age for members of the Firefighters' Pension Scheme 1992 is 55 and there are no proposals to change this position.

The Local Government Pension Scheme has an accrual rate of l/80th per year of membership with an automatic lump sum accruing at 3/80ths.

The accrual rate for the 1992 Firefighters' Pension Scheme are l/60th of pensionable pay for each year of the first 20 years of service and 2/60th for the remaining 10 years, to give a maximum of 40/60th.

The 1992 scheme is now closed to new members and firefighters recruited since 6 April 2006 will be members of the New Firefighters' Pension Scheme 2006. The new scheme has been subject to consultation and we expect to make the order bringing the new scheme into operation shortly. The normal retirement age for members of the 2006 scheme will be 60.

The accrual rate for the 2006 scheme will be l/60th of pensionable pay. There will be no maximum.

Neither firefighters' scheme provides for compulsory retirement and, subject to the agreement of the employing authority, members may continue in employment with membership of the relevant pension scheme once they reach the normal pension/retirement age.

To ask the Secretary of State for Communities and Local Government what savings estimate she has made of the effect on costs of the reforms to public sector pensions agreed with trades unions in 2005 for each year between 2006-07 and 2050-51; and if she will make a statement. (96045)

The changes made this year to the Local Government Pension Schemes after extensive consultations with major stakeholders will produce savings of some 2.5 per cent. to 3 per cent. of pensionable payroll. Some 50 per cent. of this saving is being used to provide either transitional protection or is being recycled into a new-look scheme for scheme members, planned to come into force from 1 April 2008.

The pension arrangements for firefighters were also reviewed outside the Public Service Forum and details of the new arrangements aimed at modernising and tackling the high cost and inflexibility of the Firefighters' Pension Scheme 1992 were announced on 8 September 2005, in Firefighters' Pension Scheme circular 2/2005, following public consultation.

The new arrangements which were implemented for entrants to the fire and rescue service from 6 April are estimated to cost 22.7 per cent. of pensionable pay compared with 37.5 per cent. from the 1992 scheme.

To ask the Secretary of State for Communities and Local Government what the current estimate is of the unfunded liability, in present value terms, of each public sector pension scheme for which her Department is responsible; and on what assumptions for (a) discount rate and (b) longevity the estimate is based. (96047)

The latest available information about the unfunded liabilities of the Firefighters' Pension Scheme is set out in the note laid in the House of Commons Library by my right hon. Friend the Chief Secretary on 2 March 2006. The Local Government Pension Scheme is a funded scheme.

To ask the Secretary of State for Communities and Local Government what recent estimate she has made of the (a) rate and (b) annual cost of employer contributions in each public sector pension scheme for which her Department has responsibility; and if she will make a statement. (96063)

For the period up to the financial year 2007-08,1 refer to the answer given on 17 July 2005, Official Report, column 125W, to the hon. Member for Meriden (Mrs. Spelman). Employer contribution rates are set for three-year periods by the actuarial valuation undertaken for each local government pension scheme administering authority. The next valuation, due at 31 March 2007, will set new employer costs for a three-year period from 1 April 2008 onwards. Employers' contributions in 2005-06 totalled £4.1 billion.

The rate of the employer contribution for each member of the Firefighters' Pension Scheme 1992 is 26.5 per cent. of pensionable pay, and for each member of the New Firefighters' Pension Scheme 2006, 14.2 per cent. Total current estimated employers' costs are approximately £215 million.