This Volume at a Glance:

• The Pensions Minister Baroness Altmann CBE launches campaign to help public understand 2016 State pension;

• The Milne Case consequences Rumble On; The Bugler Comments;

• Pensions Ombudsman proposals on Non Financial Injustice Restitution. The Bugler Comments – Does he need to get a grip on reality?;

• The Pensions Ombudsman benchmark ruling on Overpayments – The Implications;

A major new campaign aimed at preparing today’s workers for the most significant reform of the State Pension in decades, is launched today Saturday 19^th September 2016.

Pensions Minister Baroness Altmann CBE has unveiled the new communications drive ahead of the introduction of the new State Pension in April 2016 next year.

Under the Title “Our State Pension is Changing”, the campaign aims to broaden the public’s understanding of how the new State Pension will work and crucially, how people can find out how it affects them, based on their own National Insurance record.

Like the system it replaces, the new State Pension will be contributory in nature with the weekly payment people receive dependent on the number and type of National Insurance contributions they have made.

Minister for Pensions, Baroness Altmann CBE, said:

"Huge efforts have been put into reforming the mind-blowingly complicated State Pension system that exists today into something that, over time, will be clearer and fairer for everybody.

But the job of explaining to people how the reforms will affect them hasn’t been done well enough.

People need to understand, so they can make the right decisions about saving and preparing for later life. One of my first actions on becoming Pensions Minister was to identify this priority, and I’m very pleased to now be launching this major campaign.".

In particular, the new advertisements target people within 10 years of reaching State Pension age, a group which includes Firefighters also has access to new freedoms to spend private pension savings flexibly since this year. Many of those involved may want to base decisions about whether or not to draw down their private pension savings based on their likely State Pension amount.

Anyone aged 55 or over can apply for a personalised state pension statement that will give them an estimate of what they will get under the new system. This will be based on their work history and National Insurance contributions to date. The statements have recently been updated to include information on the contracted out deduction that may have been made.

The statements also give additional information about how people may be able to improve their State Pension before they reach State Pension age.

As well as giving everyone a clearer picture of their likely retirement income, and providing a firm basis upon which people can plan their own private or workplace pension saving, the new State Pension is also designed to tackle the inequalities of the old system.

In particular, widows, women, carers, and some lower earners who have not previously received much by way of additional pension will benefit. And self-employed people, who miss out on additional pension under the current arrangements, will be brought fully into the State Pension system, helping millions to enjoy a secure retirement.

In the first 10 years after implementation, around 650,000 women are expected to benefit from the starting amount calculation, receiving on average £8 a week more in State Pension.

A clearer, fairer, single payment.

At the heart of the new State Pension is the concept of a clearer, fairer, single payment. The full rate will be above the basic means-test in Pension Credit, but the system will remain contributory in nature.

Various complexities which have built up over decades will be swept away and, in time, there will be a much more straightforward system. People making National Insurance contributions for the first time from 2016 who have 35 qualifying years of National Insurance contributions will receive the full rate, which will be set above the basic level of means-tested support (currently £151.25 a week).

But to ensure fairness, transitional arrangements will be in place to ensure that the system recognises the National Insurance contributions made by those who have spent some of their working life in the old system. This will involve the DWP calculating a “starting amount” for the new State Pension taking into account a person’s record up to April 2016.

In future, the option for people to “contract out” of the Additional State Pension (and pay National Insurance contributions at a reduced rate) will be removed, and there will be only one National Insurance rate for employees. Starting amounts for the new State Pension will take into account whether someone has been contracted-out in the past as well as their past earnings and overall National Insurance contribution record.

Here is how it works. Go Here.

This initiative has been welcomed in the pension financial sector in that it will provide clarity and remove or correct some of the misconceptions about the changes to State pension provision and how they will interact with private pension savings including those in occupational pension Schemes e.g. Fire Service.

It is critically important that today's Firefighters and tomorrow’s Fire Service Veterans understand how the new State pension will fit into their retirement plans so that they can make the right decisions about saving and preparing for later life.

Of particular concern to the Pensions Minister are those people within 10 years of reaching State Pension age, a group which also has access to the new freedoms to spend private pension savings flexibly which is of course a matter entirely for Firefighters.

Many may want to base decisions about whether or not to draw down their private pension savings based on their likely State Pension amount.

Although the new State pension will undoubtedly be simpler and easier to understand over the long term, the transitional arrangements for the changeover from the old

system to the new are extremely complex and not readily understood by many, just yet.

The consensus view is that efforts by the DWP to explain how previously accrued rights to the State second pension and past periods of contracted out discounts are taken into account have "fallen well short of the mark".

It is probable that the DWP do not understand the ramifications themselves.

This allied with misleading statements about a new  State 'flat-rate' pension, which is unlikely for most Firefighters, has simply added to the confusion and has raised expectations which are unlikely to be achieved after this transition.

Firefighters having started, should continue to educate themselves in all these changes and the impact they will have on them in their retirement.

Advice or opinions from non-qualified pension Scheme managers or staff are hardly worthy of consideration and Firefighter would be well advised to understand and handle their own private pension affairs in future.

Update: 24 August 2015.

Since the Pension Ombudsman’s publication in May 2015 of Mr Milne’s Determination for the Firefighters’ Pension Scheme regarding commutation factors, there have been emerging enquiries and complaints about the Firefighters’ Pension Scheme and also the Police Pension Scheme.

The Pensions Ombudsman, Anthony Arter, sets out his response to some recurring themes:

" Point 1. Mr Milne has received a lump sum payment, and members of both schemes wish to know if they will also get a lump sum payment like Mr Milne. They are concerned that even if they are eligible their individual authority might not agree to pay it.

Response: The Government Actuary’s Department (GAD) has assured me and confirmed in an announcement on its website that the Government has considered the principles in Mr Milne’s Determination and their application to members of both the Police and Firefighters’ Pension Schemes. The Government has accepted the Determination and decided that appropriate redress will be paid.

Those affected are members of the Firefighters Pension Scheme who retired between 1 December 2001 and 21 August 2006, and members of the Police Pension Scheme who retired between 1 December 2001 and 30 November 2006.

GAD has prepared tables for use in the calculation of redress; and detailed guidance for each scheme to enable scheme administrators to review each case and access both the appropriate form of redress and its amount.

There are potentially some 34,000 individual cases to process.

In theory every one of those retired members could complain to the Pensions Ombudsman Service, though there would be severe practical difficulties if they did, as my predecessor, Tony King, said in Mr Milne’s Determination (see paragraph 174).

My predecessor had every hope and expectation that GAD, the Department for Communities and Local Government, and all other interested bodies, including those representing the fire and police authorities, would quickly and jointly consider what steps should be taken. I am satisfied that this is being done, however because complex actuarial, policy, funding, and taxation issues have to be worked out, and the numbers affected are so large, it will take a little time to sort out. So I have decided that at present I will not deal with enquiries or complaints about the time it is taking, or suggestions that the authorities will not pay.

Point 2: The commutation figures produced by GAD in 1998 (and other dates) are said to have been incorrect.

Response: My predecessor said at paragraph 152 of Mr Milne’s Determination, “I make no finding as to what the factor would have been – that is entirely a matter for GAD’s judgment (it is not, for example, open to me to direct that an independent actuary should be consulted)”.

GAD in performing the function of calculating actuarial factors, which necessitates the exercise of an actuarial judgment, is not a ‘person’ concerned with the administration of the Firefighters’ Pension Scheme, so it is not an ‘administrator’ for the purposes of my jurisdiction. In any event, any complaint is likely to be out of time. A complaint should be made within three years of the complaint occurring or within three years from when the member knew or ought to have known of its occurrence.

The Police and Firefighters’ Pension Schemes has attracted widespread publicity, especially since 2009 when the Court pronounced its judgment about the Police Pension Scheme. I envisage no basis for concluding that

such a complaint was made within time or indeed that I could reasonably extend the time limit. So unless good reason can be shown, I will not deal with enquiries or complaints suggesting that different actuarial factors could have been used.

Point 3: GAD has said that new commutation factors will be produced for December 2001. Some members say that the date is wrong for those people who retired prior to that date.

Response:  My  predecessor  said  in  Mr. Milne’s Determination, paragraph 64, “The question is simply what commutation tables would have been in place if the reviews that GAD itself had advised should be undertaken had in fact been undertaken. The answer is that the tables would have been reviewed in 2001 and 2004 with effective dates in 2001/2 and 2004/5”.

And further, at paragraph 122, “I can therefore consider whether GAD’s conduct in relation to the preparation of tables of commutation factors amounted to maladministration and whether Mr Milne suffered any loss as a result. My concern is not with GAD’s professional judgment in determining whether and when factors should change, but with the administrative matter of its reasonable actions in the context of Rule B7(3)”.

GAD says in attempting to reconstruct events, it supposed in all likelihood it would have analysed the demographic experience of the relevant schemes. Namely the statistical evidence of the rates of mortality experienced by members of the schemes, because mortality assumptions are key in calculating commutation factors, using data collected over successive periods of 12 months ending on 31 March. GAD says it would have taken into account also general population mortality (e.g. publication of the Continuous Mortality Investigation Report 20 on 1 July 2001) and developments in relevant interest rates. GAD’s selection date of 1 December 2001, it says, recognised the time needed to collect, review, and collate the membership data, complete the analysis and calculate the commutation factors.

I consider that any selection of a date will result in a cliff edge which may lead to those retiring before the selected date to feel aggrieved. Any decision I might make about the month chosen by GAD could have a detrimental effect on others who cannot make representations and are not bound by any determination I make. Moreover, while a different month might result in an injustice for some, it does not follow that the exercise of judgment applied in choosing a month, amounts to maladministration. There is nothing to suggest that the decision taken by GAD is one that I should interfere with (assuming that I could). Accordingly, unless good reason can be shown, I will not deal with such enquiries or complaints.

Point 4: My predecessor directed that GAD should pay interest should it be established that Mr Milne was due a further payment from his retirement date. The issue is about the date interest should be calculated.

Response: I believe that the rate for the time being quoted by the reference banks means the rate should alter as it changes over time. This is fair to all the parties.

Point 5: To whom should I make enquiries or raise a complaint; should I bring this to you?

Response: No. Please do not send individual complaints or enquiries to the Pensions Ombudsman Service. While I appreciate the importance of the case I do not intend to respond to such approaches. You should first liaise with the relevant persons e.g. your employer, or administrator. If you are not satisfied with the response I would urge you to discuss the matter with the Pensions Advisory Service.

Anthony Arter
Pensions Ombudsman.".

The whole question of  redress or restitution to the wronged pensioner has already been raised by the PO in which he has said this must be reappraised and indeed it must but with a degree of realism.

He has stated that an award of £500.0 is an 'insult' yet he now proposes to raise this to £1000.0 which quite frankly continues to be derisory if a pensioner has spent the last 8 years or more fighting to have his pension corrected.

That amount of money simply would not cover the cost of ink or paper used in mounting a campaign against a personal miscarriage of Justice set against the irreplaceable time lost from a life.

The Pensions Ombudsman really needs to get a grip on reality when dealing with this sensitive issue. This what he now proposes:

Go here.

There is a final lesson for the Pension Ombudsman in respect of the Milne case. The PO ought not to have been involved in the Complaint in the first place.

The correct forum for this Complaint and any future Firefighters pension Complaints ought have rested with the Firefighters Pension Team at the DCLG.

As the Bugler has repeatedly pointed out the correct mechanism for dealing with Firefighter pension disputes is already enshrined in the Public Service Pensions Act 2013 where the mechanism for pension dispute resolution clearly rests with this ‘Team’.

All that is required is for the ‘Fire’ Minister; the Pensions Minister; and the PO to ensure that the minor enabling legislation is drafted and enabled by the ‘Fire’ Minister/Pensions Minister (Parliament is not required)to bring this mechanism alive thus at a stroke relieving the PO of any and all future involvement with Fire Service Pension dispute resolution.

Determination-June 2015-PO-2865:

PO Arter has ordered a refund to a pensioner (civil servant) who was penalised and forced into the restitutional repayment of an 'overpayment' which he had received.

An error  which was ultimately due to his Scheme manager’s maladministration and his failure to take appropriate pension management action at the time when notified.

This is a significant ruling with far reaching consequences for all those Fire Service Veterans who were forced to pay back 'overpayments', especially in Lancashire, 'overpayments' which were the original consequences of the LFRS Scheme managers’ (Warren) maladministration.

The PO makes the hen and egg point that if maladministration had not occurred in the first place repayment would not have been necessary in the second.

In parallelism even though FSVs informed Scheme managers in most, if not all cases, that they were receiving DWP benefits  and had notified their Scheme manager accordingly, these managers failed to take the slightest notice or action.

When their errors were/are discovered ironically by FSVs themselves these self-same managers publicly blamed the victims of their own ineptitude and maladministration.

Whilst the details differ the principles remain the same that FSVs have not the slightest obligation either morally or in law to do Fire Authorities Statutory duty for them in pension management.

The PO ruled that a pensioner in the Civil Service Pension Scheme be refunded for repayments he made to the scheme after an overpayment error.

The PO agreed it was not 74-year-old Ian George Mayes-Wright's fault he had received £31,124 more than he was entitled to over a ten-year period.

The Scheme Management Executive (SME) of the Cabinet Office was told it could recoup any payments to the scheme from the Foreign and Commonwealth Office (FCO) and the scheme's administrator at the time, Capita.

Although Mayes-Wright retired from the FCO in 2000, he continued to work on a fee paid contract basis from abroad.

Under the scheme rules on abatement, anyone re-employed after retirement would have their pension suspended if they took up work offering the same salary or higher.

If the person was re-employed at a lower salary, the pension

 would be reduced so that the total earnings of salary and pension would not be more than the original salary at retirement.

According to the judgment, the FCO took until 2005 to identify and inform Capita that the pensioner had exceeded his annual earnings limit from 2000.

And despite being made aware of the issue, Capita failed to prevent further accrual of the overpayment and inform Mayes-Wright until 2010.

The pensioner has been repaying the overpayment since 2013 at a rate of around £365 per month for 83 months, but the ruling revealed he had not been consulted about whether this was sustainable.

Arter said that although money paid in error was generally recoverable, there was no evidence to suggest Mayes-Wright was given a definite description of his earnings limit.

The Ombudsman said: "It is my view that Mr Mayes-Wright acted in good faith when receiving his unabated pension as he could not have known that he was being overpaid.

"In any case, it was not a matter for him to decide; it was the responsibility of FCO. It was for them to monitor his salary against the earnings limit and inform Capita if and when it is reached."

(Bugler underline).

Arter said a refund, with interest at the base rate, should be made within 28 days of the determination.

The bottom line on this type of ‘overpayment’ scenario remains unchanged which is that it is the sole responsibility of pension Scheme managers to ‘manage’.

That is what they get handsomely paid to do, and that is what their Statutory duty also requires from them…

Point 1 :

The bottom line of this type of ‘overpayment’ scenario remains unchanged which is that it is the sole responsibility of pension Scheme managers to ‘manage’. That is what they get handsomely paid to do, and that is what their Statutory duty also requires from them;

Point 2 :

No one debates the point that Fire Authorities are ultimately entitled in law to recover ‘overpayments’ the product of their own maladministration. However, this must take place within the strict legal parameters of the Limitations Act 1980;

Point 3 :

In this pivotal ‘Determination’(PO-2865) the PO has, in natural justice, simply pointed out that no Scheme member ought to be penalised, nor punished, by any Scheme manager because of their maladministration and that as a consequence the Scheme must bear its own losses for its own failures. A sentiment, for once, with which the nation’s FSVs wholeheartedly agrees.

Point 4 :

The PO warns that repayments without consultation on the personal economic impact repayments will cause, or by implication, the use of the ‘I will because I can’  obnoxious practice of sending FSVs down the hardship route (a favourite ploy of Warren-LFRS) knowingly causing hardship, will in future, rightly, be viewed as an act of ultra vires(beyond their powers) of any Fire Authority or Scheme manager. It seems the days for such unbridled thuggery are numbered.

Point 5:

Whilst the minutiae is different the principle remain the same that FSVs have not the slightest obligation either morally or in law to do Fire Authorities Statutory duty for them in pension management.

Point 6:

Finally it seems that this new Ombudsman does not know his restitution law either in respect of maladministration by Scheme managers in relation to Scheme self-enrichment where there is well established Court case law for proper compensation in the form of compound interest and most certainly not base rate interest on recompense for all the unnecessary stress and hardship the wronged pensioner has been exposed to if only the Scheme manager had done his job in the first place.

Point 7:

Should any FSV have been bullied onto the ‘hardship route’ and forced to payback ‘overpayments’ the consequence of maladministration then a Complaint ought immediately to be framed and sent to the PO based on his Determination (PO-2865) and on these basic criteria.

•That the Fire Authority has or did acted contrary to the spirit, intent, and ruling of this ‘Determination’

• That maladministration occurred in the first place;

• That enforced hardship repayments had indeed(as intended) cause personal hardship;

• That the Scheme manager and the Fire Authority, in so acting, had acted in ultra vires;

• That the Complainat should reclaim the monies already 'extracted' under duress and raise a charge of self enrichment against the FA on the basis of 8% compound interest on the monies repaid to the wronged FSV.

Once more it bears repeating that the PO is not the correct forum for Fire Service Pension dispute resolution.

The correct forum for this Complaint and any future Firefighters pension Complaints ought to rest with the Firefighters Pension Team at the DCLG.

As the Bugler has repeatedly pointed out the correct mechanism for dealing with Firefighter pension disputes is already enshrined in the Public Service Pensions Act 2013 where the mechanism for pension dispute resolution clearly rests with this ‘Team’ . All that is required is for the ‘Fire’ Minister; the Pensions Minister and the PO to ensure that the minor enabling legislation is drafted and enabled by the ‘Fire’ Minister/Pensions Minister (Parliament is not required).to bring this about thus at a stroke relieving the PO of any and all future involvement with Fire Service Pension dispute resolution.

But until that essential enactment takes place then FSV must continue to take all their increasing volume of Complaints to the Pensions Ombudsman.