• Firefighters Pension Expectations?

• UK Central Governance-Who is responsible in law for the Scheme?

• The Lord Hutton of Furness Report (2011);the new Public Service Pension Act 2013 and it implications for the future.

• The Pension Experts? & Local Pension Boards.

The most precious element in the enjoyment of service retirement is the guarantee that on a monthly basis the correct timely payment is made to a Fire Service Veteran’s bank account. They paid for it and they earned it.

Firefighters turned out to operations. They did not as a matter of course either understand or administer Firefighters Pension Funds or Schemes.

Others whom they believed were as professionally qualified and capable in this specialist field of pensions, as they were Statutorily required to be in Service operations, and whom they trusted in good faith, were left to honestly carry out this clerical task under the overarching trusteeship of the DCLG Fire Pension Team and the delegated local Scheme manager, all now under the regulatory control of the Pensions Regulator since 2013.

However what Firefighters did understand was that underpinning their financial safety whilst exposing themselves to the daily hazards of operations within the

 communities and Nation they served the Firefighters and their beneficiaries were reassured that in the event of a career terminating serious injury or death the safety net of their pension would be there and provide for those left behind.

Indeed, not only was a sound and fair pension a reason for joining; and a reassurance throughout their Service lives; but they were prepared to invest in it by paying the highest national contributions towards its final funding by contributing 11% (now more)of their annual salaries.

The taxpayers both local and national, (and this includes Firefighters themselves) who in the end fund pension expenditure, also have the reasonable expectation that those administering and controlling the Firefighters Pension Fund which amounts to an expenditure of over £666m annually in England in 2012/13, should hold professional pension management qualifications if only to inspire public confidence that they are capable of administering such substantial taxpayers’ expenditure.

Before answering this question we should ask why a retired Fire Service Veteran(FSV) needs to know this?

When expensive pension anomalies arise or are uncovered, as they will and are, an FSV when investigating should be in a position to understand who actually administers his/her pension Scheme; who is actually responsible and accountable in law for this pension anomaly; what their individual Statutory rights are and how to progress those rights through their Scheme manager; their Fire Authority; the Secretary of State for the DCLG; the UK High and Supreme Court; and ultimately the European courts.

On 25^th April 2013 the Public Service Pensions Act 2013(PSPA) was enacted and became law. Go Here.

This Act does not supersede any existing pension Act or pension Statutory Instrument but complements and secures them in an overarching method by introducing the word ‘governance’(the act, manner, or function of governing)  into the Fire Service pension lexicon.

 A word which will have far reaching consequences for failed Fire Service pension ‘practitioners’ and ‘administrators’ with their failed pension management ‘systems’ which are clearly not fit for purpose but a word which will bring direct benefits to all FSVs and their beneficiaries in the act, manner, and quality of Governance Standards which the government guarantees that their pensions will be properly administered in the future.

Will this change in the law directly benefit a FSV in practice? Yes! How?

Put simply, this Act is a welcome overdue game changer in terms of requiring those who presently mismanage FSVs pensions to act in the future in an honest, transparent, accountable, and accurate manner when administering FSVs pensions and in particular by requiring the application of these decent ‘normal’ standards when promptly dealing with queries and questions which arise in respect of any fire pension in the future.

This long overdue new Act is designed to prevent the current unacceptable circumstances continuing. Circumstances  which range from simple error, through incompetence, to downright fraud the latter which means that the Fire Authority know they are underpaying a pension but because it enriches their coffers they surreptitiously choose not to do anything about it, and worse still, will do all in their malevolent power to prevent Fire Service Veterans doing something about either. This is simply a public scandal which the Lord Hutton reports of 2010 & 2011 identified and have created and enacted new law to correct .

There are cases where fire pensions have been underpaid by thousands of pounds for decades simply because no one knows the Rules, or cares to know them, and no pensioner can afford to challenge the arcane legal system, so all this has gone uncorrected, until now.

Do you know if you are getting your correct pension? Now the law requires Fire Authorities to get it right.

Dear Reader read on, because this could affect your pension and income in retirement in the future. The  Bugler has been especially set up at its own expense to make sure that the State no longer saves money by under-calculating and under paying your pension. We will provide FSVs with the interactive ‘tools’ including simple formulae and calculators on this website to check current pension(s). It costs nothing to know. What a FSV chooses to do about it after a miscalculation is identified is another matter.

If pension(s) have been underpaid in the past, and many have, then the time has come for Fire Authorities to pay it all back. This new Act clearly states that if a Fire Authority/Employers have in error underpaid any pension and as a consequence enriched itself, they are  legally required to pay it all back. Firstly to the Scheme manager with interest so that the repayment can be passed on to the Member of the Scheme. It is simply not a question that they can suit themselves, or choose not to any more, there will be no quibbling;  just pay it back.

This new Act requires Fire Authorities to pay the pension(s) back in full, with interest, and as matters stand in the County Court, in a long established legal principle this will be with 8% compound interest and while it may not state so in the arcane language of the new Hutton Act that is what it means in Court practice.

The Act also requires Fire Authorities to pay the costs of any FSV, that is the time, trouble, expense, including legal fees, expended in the recovery of any underpaid pension monies.

Finally this new Act, with a sting in the tail, places on the Secretary of State of the DCLG(The Fire Pension Team) the legal Statutory duty to resolve individual pension disputes by stating in the Act Schedule 3 Para 15 the following:     “The resolution of disputes and appeals (including the referral to a court of law of questions of law which under the scheme fall to be determined by the responsible authority).”.

So what are the major failings which have required the introduction of this new Act of Parliament ?

There is substantial anecdotal evidence of unacceptable proportions, all of which came to the attention of the Hutton Inquiries,which supports the statement that Firefighters’ pension ‘management’ is not fit for purpose in the 46

pension regimes throughout England in terms of the failure of honesty, transparency, accuracy, and accountability.

So what are the ‘routine’ failures when any attempt is made to achieve the resolution of a simple pension problem? Laziness in, or ignoring correspondence; scandalous lack of accountability to anyone, least of all the Members of a Scheme; deliberate obstruction, and malignant delay; playing their invented unlawful ‘games’; this list is not exhaustive.

One of the first, and probably universal scandals of Scheme managers, is their deliberate failure to provide fundamental access to a fire pension ‘expert’ in order to secure a face-to-face meeting when pursuing a simple query or complaint.

It is simply unacceptable that these ‘experts’, whom we pay, deliberately hide themselves behind an electronic ring fence which blatantly denies any human interface.

This universal practice is simply an affront to democracy by denying the human instinct which is to meet; to query; to resolve simply and promptly.

This is taxpayers pension money held in trust for the pensioner, just like a bank; with any bank it is expected that when there is an anomaly the client will have direct prompt access to a member of staff who is trained, qualified and competent; one who understands your financial affairs; and finally can promptly and pleasantly rectify errors by either party.

 Currently there is absolutely no concession by these fire pension ‘experts’ to an intrepid FSV or ageing beneficiary who may not have the ability or access to modern technology –and many do not by choice- when pursuing a simple query or complaint. This defensively arrogant and implacable posture which is deliberately intended to discourage the FSV and their beneficiary family is breathtakingly conceited and by its very nature immediately creates suspicion in the mind of the ‘customer’ (as they like to refer to us) which in turn defeats any preconception of an honest transparent dialogue.

 What is it that these ‘practitioner experts’ fear? Their own ‘professional’ pension management ignorance? Clearly they are professionally ignorant or it would not be necessary to have a new Act to correct this corporate and individual attitude.

Could it be that they might actually meet a well-read and researched FSV or family who have highly competent legal support who actually know more about this Fire pension than they do, and whose questions they will be embarrassingly unable to answer? ‘Ay there is the rub’, said Shakespeare.

By insisting that the ‘customer’ ‘writes in’, the next artificially created obstacle, this antic builds in time to check and answer, which maintains their ‘face’ and the false façade of expertise where none exists.

In the future FSVs will not need to trust to the integrity, honesty, or transparency of any ‘practitioner’ administering a Fire Service pension because quite simply they have betrayed that trust in the past by their errors, arrogant deceit, and covering up antics and with this change in the Statute law they now become personally liable and accountable in law for their incompetence to the Pension Regulator,Parliament, and ultimately to the will of the people.

In the future these ‘practitioners’ will be required to have training and retraining in current pension law and Scheme Rules; in basic accountancy; to be demonstrably accomplished at correctly managing a single fire pension; all leading one assumes, to the individual’s attainment of nationally recognised specialist pension management qualifications.

In short, a pension administered by proper professionals who are personally accountable and liable to the Pension Regulator and in Law for pension ‘governance’ under their lawful control; who are fundamentally honest and transparent (as the new Act demands) and when they make a human error  have the human decency to admit so.

All this ‘specialism’ is already reflected in their substantial salaries but for which, scandalously, they are not required to hold a single pension management qualification, or any qualification of any description.

 It is supremely ironic that those who fail in their arrogance to administer retired Firefighters pensions properly could not receive the rescue and humanitarian skills of those self-same Firefighters when they were in service because they were required to hold Statutory qualifications before they could administer aid to them in the streets…

Later using Lancashire as an appalling prime exemplar of institutionalised failure in fire pension management it is the Morning Bugler’s intention using real ‘practitioners’; with real names; with real cases; with real reports from the Audit Commission; with real locally published public records, memoranda, and Committee Minutes to demonstrate why it became critical to produce this new Act if only from a sense of fair play to those who had valiantly served their communities and this Nation and in certain cases being injured, or paying the final price.

 What will all this change mean in actual pragmatic terms and what will this new structure look like after reforming the ‘governance’  of Public Sector Pensions?

In 2010 the Independent Public Service Pensions Commission’s chaired by Lord Hutton of Furness interim report entitled “Reforming Public Sector Pensions” which was accepted by the Government as a basis for consultation concluded that there was a critical need for the independent scrutiny and accountability of the public service pension schemes. Schemes which included the Firefighters Pension Schemes. Go Here.

The Lord Hutton’s final report of 2011 recommended that the purpose should be to ensure all schemes meet minimum standards of governance and administration and in summary that:

• every public sector pension scheme should have a properly constituted, trained, and competent Pension Board with member nominees responsible for meeting good standards of governance, including effective and efficient administration (and in the case of locally administered schemes, a local Pension Board in recognition of the need for local accountability through democratically elected local government members);

• every public sector pension scheme should have a pension policy group(such as the Firefighters’ Pension Committee at national level) to consider major changes to Scheme rules and other matters;

• governance and the availability of information would be improved by Government establishing a framework that ensures independent oversight of the governance, administration, and data transparency of public service pension schemes. Go here.

The Government subsequently concluded that the independent Pensions Regulator was the most suitable agent to perform this regulatory oversight function and in a significant expansion of its role in future governance this is to include the supervision of other government departments which have direct responsibility for public service pension schemes, including the DCLG with its Firefighters Pension Schemes.

To support this objective on the 25^th April 2013 Parliament enacted the Public Service Pensions Act 2013(PSPA). This Act provides retrospective ‘connection’ to existing Schemes, for example, the ’92 Scheme and the 2006 Schemes. This means that all existing Firefighter Pension Schemes now come under this Act for the high standards of governance and administration which the Act requires.

These standards, which are new and additional, will be enforced by the Pensions Regulator and should not be confused with existing pension law, for example, the 1992 Statutory Instrument No:129(The ’92 Scheme) which will continue unchanged in the detailed application of the Scheme Rules to a particular pension on a particular day.

In practice, and with effect from last April 2013, this means that the DCLG Secretary of State(“responsible person”) with his Fire Pension Team(Civil Servants) now become without question, the legally “responsible authority” for the 46 Firefighter Schemes in England under their collective jurisdiction which includes all their 46 Scheme managers with their own staff.

In addition these civil servants with their delegated Scheme managers with their delegated staff become corporately and personally directly accountable for their actions in law to the Pensions Regulator and Parliament.

Without doubt this new Act will change the landscape for all existing and future new Fire Service pension Schemes making all those administrators mentioned above directly responsible and accountable in transparency and honesty for their administration and indeed their corporate and personal maladministration, misfeasance, and malfeasance.

For the general activities of the Firefighters’ Pension Committee and its membership which is chaired by the DCLG Fire Pension Team Leader.
For the current membership Go here.

On the 25^th June 2012 the advent of these major changes to the governance of Firefighters Pensions was first flagged up to the DCLG Firefighters Pension Committee in this document. Go here.

On the 3^rd October 2012 a second document was placed before the same Committee for further information as the envisaged legislation advanced from drafting into a Bill for Parliamentary review and then enactment.

This briefing document laid out the purview of how the hierarchy of governance was going to be constructed and made to work in respect of the Fire Service. Go Here.

The attendees, including the civil servants of the DCLG Fire Pension Team, were informed of the major changes in government law and policy which would directly impact at corporate and personal level in responsibilities this reinforcing of governance would have at every level of fire pensions administration.

On the 25^th April 2013 Public Service Pensions Act 2013(PSPA) became law and with it some of the previous minor perceptions proved inaccurate.

The PSPA required the Pensions Regulator (TPR) to draft and publish a new Code of Practice(No:14) of ‘governance’ for all those who have a requirement for compliance(both personal and corporate) with this new Act including, in this hierarchical chain of ‘regulated community’ those in governance which includes the DCLG Secretary of State with his DCLG Fire Pension Team; those(up to 21) serving members in governance on the DCLG Firefighters’ Pension Committee; those elected local authority members in governance on the newly created Pension Boards (if local pension accountability is democratically opted for); the Fire Authority pension Scheme managers in governance; to finally the lowest clerk who in governance will actually calculate the correct pension(s) to be paid. 

This draft CoP No:14 was opened for consultation and closed on the 17^th February 2014.

The Morning Bugler contributed to this public consultation.  Go Here.

The Final Code of Practice No: 14 was published in April 2015 Go Here.

In this final edition TPR outlines her approach to governance by using the terms ‘Education’; ‘Enabling’; and when those principles fail ‘Enforcement’, by civil penalty if needs be…

‘Where education and enablement fails to drive behaviour to the necessary standard we have a number of enforcement options available to us.’.

Furthermore, if that was not clear enough, TPR makes it clear to all these ‘governors’ that it…

‘ will therefore consider the risks that poor governance and administration standards and practices, and failures to operate schemes within the requirements of the law, present to public service schemes and how those risks may be mitigated by action to educate, enable and, where necessary, enforce’.

TPR has given notice of its ‘risk focus’ namely those areas of governance likely to produce failure by not serving and protecting the benefits of Scheme members(Firefighters) in a poorly governed Scheme, an exemplar in Lancashire which we will look at in detail later:

• Knowledge and understanding: members of pension boards will need to be conversant with the regulations (or Rules) and administration policies of their scheme and have the appropriate knowledge and understanding of pensions law to be able to assist their scheme manager effectively;

• Records: secondary legislation will specify the records required to be kept. The completeness and accuracy of these records will be key to the effective and efficient operation of schemes, including ensuring that the right benefit is paid to the right person at the right time. This will be supported by the operation of appropriate internal controls;

• Member communication: the quality of the information provided to members in terms of accuracy, timeliness and clarity is an important factor in achieving good member outcomes;

• Dealing with internal disputes: public service schemes are usually large and complex and things will sometimes go wrong. The processes for investigating and resolving disputes quickly and effectively have a key role in contributing to the effective governance and administration of schemes.

TPR sets the ‘height of the bar’ in its governance expectations from those with legal responsibility by the following statement:

• Scheme managers and pension boards will play the central role in ensuring that public service schemes are governed and administered effectively and that the right benefits are paid to the right people at the right time.

• We expect scheme managers and pension board members to carry out their roles competently and have sufficient skills, knowledge and understanding to be able to do so. We acknowledge the complexity of their roles and the fast-changing and challenging conditions facing them and employers alike.

It almost goes without saying that it is implicit  in this finalised Code of Conduct  April 2015 that TPR reasonably  expects that the Courts ‘must’ refer to the Code of Practice when reaching a Judgement; ‘must’ being the replacement for the age old ‘shall’ in legal definitions which means that it is a legal requirement, not a ~ suggestion.

So how will this work in practice and who picks up the bill when these ‘governors’ get it all wrong in practice?     

Even though the Act is already law and looking at this scenario almost 12 months on very little seems to have been progressed within the Fire Service presumably based on the excuse that all those who are to report to the Pension Regulator are waiting for his Code of Practice.    

However, all those involved in governance ought not to forget that as the law stands compliance started on the 25^th April 2013 and with it came enforceable and active legal duties and penalties for non-compliance and though it seems, with the exception of an ad hoc arrangement in Greater Manchester FRS, little has been done in the other 45 Fire Pension Schemes, the law is still the law which does not have to wait for a Code of Practice to become active.

By consulting the Act, pending the introduction of the Regulator’s Code of Practice which will be authoritative but not the law, it is clear that the hierarchical system for England will look like this:

• The Pensions Regulator – will independently, by law, hold the power of ‘regulatory oversight’ and ultimate accountability to Parliament;

The Secretary of State for the DCLG – will be the legally ‘responsible person’ for the 46 Firefighters’ Pension Schemes(England) under his jurisdiction and will ultimately be accountable in governance to the Pensions Regulator;

• The DCLG Fire Pension Team – will be the new DCLG Fire Pension Board(DCLG-FPB) for these 46 Schemes; and will ‘assist’ their delegated Scheme managers and their delegated staff to manage their Schemes more honestly and accurately ; and will ultimately be accountable for this governance to the Pensions Regulator. The Act in Schedule 3 also makes it clear that this Board is responsible in law for pension dispute resolution and Appeals and for the requirement to place an unresolved dispute, which is a question of law, before the High Court(and above) at the DCLG’s expense one presumes. This is what the Act states in Schedule 3 paragraph  15:             “The resolution of disputes and appeals (including the referral to a court of law of questions of law which under the scheme fall to be determined by the responsible authority).”.

• The Firefighters Pension Committee – will become the Firefighters Pension Scheme Advisory Board(FPSAB) which will for pragmatic reasons include the DCLG Fire Pension Board at its joint meetings. The Act allows the civil servants involved to hold appointments on both their Fire Pension Board and this Advisory Board unless there is a conflict of interest.

• The joint FFSAB/DCLG-FPB will be responsible for providing advice to the Secretary of State(the responsible authority) at his request on the desirability of changes to the Firefighters Pension Scheme and other advice to Scheme managers and clerical staff. A person to whom advice is given by virtue of the Act must have regard to the advice.

Individual specialists appointments co-opted to the DCLG-FPB and to the FPSAB will be made by approval of the Secretary of State as the ‘responsible authority’ after they fulfil certain personal conditions, including pertinent current pension knowledge.

• Local Pension Boards(The employers) – In the case of England because there are 46 Schemes(potentially each with their own Fire Pension Boards-if the local authority opt for local democratic control and accountability) with their own Scheme managers. The FSAB/DCLG-FPB may provide advice, whether requested or not, to these Scheme managers and to their Fire Pension Boards(if created) in respect of ‘effective and efficient administration and management of the Scheme and any statutory Pension Scheme that is connected with it or any pension fund of the scheme and any connected scheme’.

The Act places on the employer several financial duties and penalties:

• the Act financially penalises maladministration;

• the duty to pay any costs relating to the administration of the Scheme;

• malfeasance, misfeasance and just plain fraud with the Scheme manager’s(employers) duty to pay any costs incurred, including those of the maligned pensioner, because of its failure to comply with its legal obligations under the Scheme;

• the Scheme manager must compensate the pensioner by not only paying him back but by including the payment of interest on the  payments to be made to him by virtue of the Scheme manager’s failure.

It seems the only remaining question to be answered at this point is whether or not a local Fire Authority will opt for democratic local accountability by creating its own Fire Pension Board which nevertheless will still be accountable in a chain of legal ‘authority’ and governance up through the hierarchy outlined above to the Pensions Regulator.

It may well be that the onerous requirements which the Regulator proposes to lay on all those in governance will militate against the creation of many, if any, local Fire Authority Pensions Boards.

 It is difficult enough, as the Morning Bugler has commented before under its ‘Third’s Rule of Work’(One third always will; one third will if asked; and one third never will) to get local Fire Authority councillors to work at all and now for the Regulator to propose that a councillor appointed to any position in Fire Pension chain of legal ‘authority’ and governance must comply with his ‘suggestions’ for personal knowledge of pensions law; personal training; personal retraining; and personally recorded training will in all likelihood have such councillors voting ‘No!’ to any proposal to create a local Fire Pension Board because it will require personal efforts and time over and above collecting their expenses and it is still to be noted turkeys like this still seldom vote for Xmas…

 So what will the Regulator, following the edicts of the Act, actually require in participating pension governors at all levels bearing in mind that at the moment in response to a Bugler’s question none of the 4 civil servants on the envisaged DCLG Fire Pension Board has either formal pension management qualifications; formal accountancy qualification; or any actuarial qualifications?

The Regulator enforces(by the use of the word ‘must’) what is required. ‘The degree of knowledge and understanding required is that appropriate for the purposes of enabling the individual properly to exercise the functions of a member of the pension board.’

A member of the pension board of a public service pension scheme must be conversant with:

• the rules of the scheme, and,

• any document recording policy about the administration of the scheme which is for the time being adopted in relation to the scheme.

A member of a pension board must have knowledge and understanding of:

• the law relating to pensions, and,

• any other matters which are prescribed in regulations.

The legislative requirements about knowledge and understanding not only apply to pension board members, but Scheme managers who must take account of this guidance as it will support them in understanding the legal framework and enable them to help pension board members to meet their legal obligations.

Schemes should establish and maintain policies and arrangements for the acquisition and retention of knowledge and understanding for their pension board members. Schemes should designate a person to take responsibility for ensuring that a framework is developed and implemented.

It is for individual pension board members to be satisfied that they have the appropriate degree of knowledge and understanding to enable them to properly exercise their functions as a member of the pension board. (And one assumes that what is good enough for a Board member applies equally to a Scheme manager and his pension administering staff.

In synopsis, anyone in governance must receive training in understanding their Scheme Rules which means understanding the applicable law; receive training in understanding the written policies or guidance from the DCLG Pension Board; and understanding broader pension laws and Acts, because one cannot work without the other; all designed to make sure there is the correct application of the law within a legal framework; all of which actions are to be initiated by a delegated person, and one assumes recorded for governance accounting when required by the Regulator.

Whilst It is unclear in this draft Code of Practice one must assume, in mixing metaphors, that the ‘acquisition and retention of knowledge’ refers to the critical need for the ‘bean counters at the coalface’ to have the necessary and critical nationally recognised professional qualifications to carry out this specialist work which is of course currently reflected in their salaries but for which they currently hold no qualifications at all.

It is as a consequence of the institutionalised failures over the preceding decades of all those currently involved in UK Fire Service pension ‘management’ that this new Act was required and time will tell what the final Fire pension administration structure will look like and whether in fact it will deliver the promises made.

With the greatest respect there is one startling oversight in  Hutton’s priorities, which is that of pension management, regular proactive compulsory oversight, and annual Statutory accountability.

Before the Code of Practice for Pension Scheme management was finalised(which emanated from the Hutton Report) the Bugler repeatedly made the point in writing as a response to the draft Code that a major failure of Hutton was the complete absence of the critical need for those who were being handed the ‘pots of gold’ for later disbursement to pensioners to have formal training leading to Statutory qualifications at all levels of pension administration, top to bottom.

Who in their right minds, given the disastrous failures of recent pension management in the very areas in which Lady Altmann campaigned, is going to be trusting, or foolhardy enough, to hand over their precious pension contributions without at least being reassured that those who administer them will actually be formally trained, Statutorily qualified, and legally accountable and critically in knowing what they are actually doing in respect of the correct application of pension Law.

This is not a whimsical add-on to pension administration, it is a specialisation requiring specialist expertise and current Statutory knowledge.

It is interesting to note that there is no such a ‘creature’ as a Statutory qualification for pension management but a look at Lancashire provides some very disturbing facts

when set against the £300+mil they actually pay out annually. Go Here.

This is another aspect of Hutton which is quite unrealistic and unworkable as future ‘misadventures’ will demonstrate.

Namely, putting local councillors on a so called ‘Local Pension Board’ to ‘assist’ the Scheme manager to deliver the benefits of the Scheme to its members.

The intellectual dwarfs in charge of Scheming managers.

What a recipe for yet another pension disaster.

To achieve even a miniscule understanding these Councillors surely must receive professional pension administrative training to understand and administer the appropriate pension law and where, they are going to whine, are the going to find the time to do that, and from whom?

Certainly not from the unqualified ‘experts’ who have ‘managed’ the current Schemes into the mess they are so self-evidently in right now, to say nothing of their individual and collective intellectual capability to undergo such training in the first place.

It seems to the Bugler that most of them can however find time to fiddle their expenses and just think when they receive extra payments to undergo this training what a golden opportunity this will be for them to fiddle even more of their expenses and as usual do even less work…