Firemens Pension Scheme 1992 · CAS-84085-R9H4 — Pensions Ombudsman determination

CAS-84085-R9H4

Ombudsman’s Determination Applicant Mr S

Scheme Firemen’s Pension Scheme 1992 (the Scheme)

Respondents South Wales Fire & Rescue Authority Rhondda Cynon Taff County Borough Council (the Council)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

1 CAS-84085-R9H4 Detailed Determination Material facts

On 31 December 2014, The Firefighters’ Pension (Wales) Scheme (Amendment) Order 2014 (the 2014 Order) was implemented. This Order made some retrospective amendments to the 1992 Order from 1 July 2013.

Prior to the 2014 Order, if a firefighter was temporarily promoted in the last three years of their employment, they would benefit from the increase in salary in their pensionable pay calculation. This was because their average pensionable pay at retirement (the member’s ‘final salary’) was calculated using their best pensionable pay over the last three years. This was then used as the basis of their pension entitlement.

The 2014 Order amended Rule B5C (the New Rule). This changed the way in which pension benefits are calculated. 2 Under the New Rule, firefighters are awarded an Additional Pension Benefit (APB), in relation to any temporary promotion, prior to their retirement, for the duration of that promotion. Because the extra salary while on temporary promotion does not count towards the final salary pension calculation, the overall benefit under the New Rule is not as great as it was prior to its implementation.

Mr S was born in September 1963. He was previously employed by the Fire and Rescue Service (the Service), and was an active member of the Scheme from 11 April 1983, until he retired on 30 June 2018.

Mr S said that around November or December 2017, he had heard through “friendly conversations” with a colleague at the Service, (Mr M), that a change might be made concerning how temporary promotions were reflected in pension calculations. In early 2018, Mr S and his colleague Mr R had a meeting with Mr M. Mr S said that during this meeting, Mr M informed them that from 1 April 2018, any temporary promotion salary would be reflected by an APB, and would not be used in the calculation of his pensionable pay. However, Mr M informed him that all retrospective service prior to 1 April 2018 would be treated in the same way as it had been previously. So, essentially, he had to decide whether he wanted to retire at that time or continue working.

1 Relevant sections of the 1992 Order are in Appendix 1. 2 Details of the Old and New Rule B5C are detailed in Appendices 2 and 3.

2 CAS-84085-R9H4 On 28 January 2018, Mr S received a spreadsheet from the Council (the January Spreadsheet). Alongside separate tabs setting out calculations regarding Mr S having exceeded his annual allowance, the Spreadsheet also set out a retirement quotation, which contained substantially the same incorrect information as provided in the Quotation (see paragraph 13 below). 3 The January Spreadsheet included the following disclaimer:

“Note: This illustration is based on my understanding of the calculation and IS NOT definative [sic]. YOU should take your own advice from RCT Pensions or an Independent Financial Adviser. [original emphasis]

All figures used in the calculation are taken from those provided to you by RCT Pensions Administrator - there accuracy [sic] is dependent on the figures provided by RCT Pensions

If you feel these figures are not accurate you should make enquiries with RCT Pensions”

Mr S gave his notice to retire on 1 April 2018. At the time his substantive post was ‘Group Manager A, Competent’. He had been temporarily promoted to ‘Group Manager B, Competent’ from March 2016, and remained in this post until he retired.

In April 2018, the Service issued a bulletin (the Bulletin) to members of the Scheme. This informed members that if they retired after 1 April 2018, new rules concerning how temporary promotions would be treated for pension calculations, would be implemented. 4

Subsequently, and after he had already put in his notice to retire, Mr S requested a retirement quotation from the Council.

On 23 May 2018, the Council sent Mr S a quotation of his estimated retirement benefits, (the Quotation). This informed him that the estimated benefits he could receive at retirement was a lump sum of £201,614.32 and an annual pension of £29,398.71. His final salary was stated as £58,555,20. This figure included his temporary promotion salary. The Quotation included the following disclaimer:

“It must be borne in mind that these are provisional figures and any changes in the assumptions made will produce a change in your estimate award.”

Mr S received the benefits stated in the Quotation when he retired on 30 June 2018.

3 Mr S did not include the January Spreadsheet or refer to it in his initial submissions to The Pensions Ombudsman. Following my Preliminary Decision on this complaint, Mr S provided a copy of the January Spreadsheet and also provided evidence that it was prepared on 14 December 2017. He had sent it to his solicitors on 20 January 2022. His witness statement setting out the details of his complaint, appended to his application to The Pensions Ombudsman was dated 27 January 2022. 4 This Bulletin was sent by way of the weekly Routine Notice of 3 April 2018. Details of the Bulletin are in

Appendix 4. 3 CAS-84085-R9H4 On 1 February 2019, the Service wrote to Mr S (the February Letter). This letter said in summary:-

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On 12 February 2019, the Service sent Mr S a further letter, detailing the outcome of the Authority’s meeting held the day before. This letter said the Authority had determined that:

5 The three recommendations are detailed in Appendix 5.

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On 8 March 2019, Mr S made a complaint through the first stage of the Scheme’s Internal Dispute Resolution Procedure (IDRP). In summary he said:-

6 CAS-84085-R9H4 On 26 March 2019, the Council wrote to Mr S. It provided a revised retirement benefits statement and said in summary:-

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Summary of Mr S’ position

6 A summary of Mr S’ schedule of loss is detailed in the Appendix 6.

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Loss of chance

7 Corsham and Others v Police and Crime Commissioner for Essex and Others [2019] EWHC 1776 (Ch)

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8 Hanif v Middleweeks [2000] Lloyd’s Rep. PN 920 at [14] per Mance LJ 9 See Appendix 6.

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Summary of the Authority’s position

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Conclusions

For a claim of negligent misstatement to be successful, it is necessary to establish whether the Authority, as Scheme manager, owed Mr S a duty of care to provide accurate information and, by providing incorrect information, breached its duty. Following Robinson v Chief Constable of West Yorkshire Police (Rev 1) [2018] UKSC 4, I consider that the correct approach is to consider whether there is already established precedent for a duty of care to apply in a particular situation. Here, I consider that there is clear established precedent that an administrator or manager providing information following a request from a scheme member is under a duty to

14 CAS-84085-R9H4 ensure that the information is accurate. 10 The Authority owed a duty of care to Mr S to provide accurate information, and breached its duty.

It has been established in Corsham and Others v Police and Crime Commissioner for Essex and Others [2019] EWHC 1776 (Ch) that the following questions should be considered when establishing reliance:-

10 Musawi v Bevis Trustees [2009] 055 PBLR - [2009] EWHC 1915 (Ch) at para 16 NHS Business Services Authority v Leeks & Ors [2014] EWHC 1446 (Ch) at para 59 NHS Pensions Agency and another v Pensions Ombudsman and Beechinor [1997] OPLR 99 at 102 Westminster City Council v Haywood [1998] Ch. 377 at 394

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11 See Appendix 1.

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18 CAS-84085-R9H4

Dominic Harris

Pensions Ombudsman 11 March 2025

19 CAS-84085-R9H4 Appendix 1

“…

PART G

PENSIONABLE PAY AND CONTRIBUTIONS

G1 Pensionable pay and average pensionable pay

(1) Subject to paragraphs (2), (9) and (10), the pensionable pay of a regular firefighter is the aggregate of—

(a) the amount determined in relation to the performance of the duties of his role (whether as a whole-time or part-time employee) other than those amounts payable to him in respect of the benefits within rule B5C(5); and

(b) the amount (if any) of any benefits which are pensionable under rule B5C(1).

(2) …

(3) The average pensionable pay of a regular firefighter is, subject to paragraphs (5) to (7C), the aggregate of his pensionable pay for the year ending with the relevant date.

(4) The relevant date—

(a) for the purposes of rule C7 (spouse’s or civil partner’s award where no other award payable), and the Compensation Scheme, is the date of the person’s last day of service as a regular firefighter, and

(b) for all other purposes of this Scheme, is the date of the person’s last day of service in a period during which contributions were payable under rule G2.

(5) Subject to paragraphs (6) and (7), if he was in receipt of pensionable pay for part only of the year ending with the relevant date, his average pensionable pay is the aggregate of his pensionable pay for that part multiplied by the reciprocal of the fraction of the year which that part represents.

(6) For the purposes of paragraphs (3) and (5), any reduction of pensionable pay as a result of any—

(a) sick leave;

(b) stoppage of pay by way of punishment;

(d) paid additional maternity or additional adoption leave; or

(e) unpaid additional maternity or additional adoption leave where contributions have been paid under rule G2A,

shall be disregarded.

(7) If the amount determined in accordance with paragraphs (3) to (6) is less than it would have been if the relevant date had been the corresponding date in whichever of the two preceding years yields the highest amount, that corresponding date shall be taken to be the relevant date.

(7A) The average pensionable pay of a regular firefighter who—

(a) is entitled to a long service increment; and

(b) retires after 30th September 2006 and before 1st October 2007, or becomes entitled to a deferred pension under rule B5 within that period,

shall be calculated—

(i) as if his long service increment had accrued at the rate of £990 per annum (disregarding the reduction in the amount of the long service increment that had effect in relation to times on and after 1st October 2006), and

(ii) disregarding any LS-related payment.

(7B) The average pensionable pay of a regular firefighter who—

(a) is entitled to additional pension benefit under rule B5B (additional pension benefit: long service increment), and

(b) retires on or after 1st October 2007,

shall be calculated on the basis of whichever of the following paragraphs yields the greater amount—

(i) the calculation is made with regard to the amount credited to him under rule B5B, but without regard to his long service increment and any LS- related payment, or

(ii) the calculation is made with regard to his long service increment and any LS-related payment, but without regard to the amount credited to him under rule B5B.

(7C) The average pensionable pay of a regular firefighter shall be calculated without reference to any additional pension benefit credited under rule B5C (additional pension benefit).

21 CAS-84085-R9H4 SCHEDULE 2

Part 1 – Ordinary pension

Rule B1

Subject to Parts VIA, VII AND VIII of this schedule, the amount of an ordinary pension is-

30 × A 2 × A × B + 60 60 Where-

A is the person’s average pensionable pay and

B is the period in years (subject to a maximum of 5 years#0 by which his pensionable service exceeds 25 years.

22 CAS-84085-R9H4 Appendix 2

“B5C Additional pension benefit: continual professional development

(1) A regular firefighter who, in any CPD year beginning with the year commencing on 1st July 2007, receives CPD payments, shall be credited with an amount of additional pension benefit in respect of that year.

(2) Subject to paragraph (3), the amount of additional pension benefit in respect of a CPD year shall be determined on 1st July immediately following the year in question in accordance with guidance and tables provided by the Scheme Actuary.

(3) Where the Retail Prices Index for the month of September preceding the relevant tax year is higher than it was for the month of September in the CPD year in question, the amount of additional pension benefit for that CPD year (as calculated in accordance with paragraph (2) and, if applicable, this paragraph) shall be increased by the same percentage as the percentage increase in the Retail Prices Index.

(4) Any increase in accordance with paragraph (3) shall be applied with effect from the first Monday of the relevant tax year.

(5) In this rule—

“CPD payments” , as regards a firefighter, means payments made to him by his employing authority in respect of his continual professional development;

“CPD year” means a period of 12 months beginning with 1st July in which a firefighter is in receipt of CPD payments;

“relevant tax year” means a tax year in relation to which—

(a) the amount of a firefighter’s pension benefits is calculated for the purposes of this Scheme, and

(b) he is not in receipt of a pension under this Scheme or entitled to a deferred pension under rule B5;

and a tax year is a relevant tax year in relation to a particular CPD year if it is the tax year in which CPD payments for that CPD year are taken into account; and

“tax year” means the period of 12 months beginning with 6th April.”

23 CAS-84085-R9H4 Appendix 3

“…

B5C Additional pension benefit

(1) Where a fire and rescue authority determines that the benefits listed in paragraph (1) are pensionable, and in any additional pension benefit year pays any such pensionable benefits to a regular firefighter, the authority shall credit the firefighter with an amount of additional pension benefit in respect of that year.

(2) Subject to paragraph (3), the amount of additional pension benefit in respect of that year shall be determined on 1st July immediately following the year in question in accordance with guidance and tables provided by the Scheme Actuary.

(3) The amount of additional pension benefit determined in accordance with paragraph (2) shall be increased on the first Monday of the following relevant tax year by the same amount as any increase which would have applied if that additional pension benefit were a pension to which the Pensions (Increase) Act 1971 applied and the beginning date for that pension were the 1st July of the tax year immediately before the relevant tax year.

(4) For the avoidance of doubt, the increase of additional pension benefit in the tax year 2010/2011 shall be increased by the same percentage as the percentage increase in the Consumer Prices Index in September 2010 with effect from Monday 11th April 2011.

(5) The benefits referred to in paragraph (1) are—

(a) any allowance or supplement to reward additional skills and responsibilities that are applied and maintained outside the requirements of the firefighter’s duties under the contract of employment but are within the wider functions of the job;

(b) the amount (if any) paid in respect of a firefighter’s continual professional development;

(c) the difference between the firefighter’s basic pay in their day to day role and any pay received whilst on temporary promotion or where he is temporarily required to undertake the duties of a higher role;

(d) any performance related payment which is not consolidated into his standard pay.

(6) In this rule—

24 CAS-84085-R9H4 “additional pension benefit year” means the period of 12 months beginning with 1st July in which a firefighter is in receipt of any of the benefits listed in paragraph (5).

“the beginning date” means the date on which the pension is treated as beginning for the purposes of section 8(2) of the Pensions (Increase) Act 1971;

“following relevant tax year” means the tax year after the relevant tax year, in relation to which the member is not a pensioner member or entitled to a deferred pension under rule B5;

“relevant tax year” means a tax year in relation to which—

(a) the amount of a firefighter’s pension benefits determined under this rule for the purposes of this Scheme is taken into account for tax purposes, and

(b) the firefighter is not in receipt of a pension under this Scheme or entitled to a deferred pension under rule B5; and

“tax year” means the period of 12 months beginning with 6th April.”

25 CAS-84085-R9H4 Appendix 4

“Title: Firefighters’ Pension Scheme 1992 (FPS 1992) (Amendment to Rule B5C)

The Firefighters’ Pension (Wales) Scheme (Amendment) Order 2014 came into force on 31 December 2014 and made retrospective amendments from 1 July 2013 to the Firefighters’ Pension Scheme 1992 (FPS 1992).

The Order introduced a new Rule B5C – Additional Pension Benefit to the FPS 1992. This new Rule requires the Fire Authority to take a decision on whether temporary promotion for members of the 1992 Scheme is pensionable or non-pensionable (if pensionable then the calculation of pension of pension will be made on an Additional Pension Benefit (APB) basis).

At the Fire Authority meeting held on 26 March 2018, the Fire Authority took the decision not to introduce the new Rule B5C – Additional Pension Benefit on a retrospective basis to 1 July 2013, but to make all temporary promotion pensionable on an APB basis with effect from 1 April 2018.

The effect of this decision is that:

Active members of the 1992 Scheme who are temporary promoted on or after 1 April 2018 will have their pension calculated on an APB basis from this date forward.

Active members of the 1992 Scheme who have been temporary promoted after 1 July 2013, but before 1 April 2018, and their retirement date is more than 3 years since the temporary promotion, will have their period(s) of temporary promotion calculated on an APB basis.

Active members of the 1992 Scheme who have been temporary promoted prior to 1 April 2018, and can retire within 3 years of the 1 April 2018, will still be able to use any period(s) of temporary promotion as part of the best of their last 3 years to benefit from the increase in salary in their final salary pension calculation, hence leaving existing and future pension benefits in the position they are currently at the point of retirement.

It should be noted that for this group if an individual chooses not to retire within 3 years of 1 April 2018, then their pension calculations will be based on the new Rule B5C – Additional Pension benefit and have any previous temporary promotion recalculated and applied on an APB basis.

Date of Bulletin issue: 29 March, 2018…”

26 CAS-84085-R9H4 Appendix 5

“The first recommendation is that the Fire Authority confirms that temporary promotions are pensionable, and that this decision is applicable from the effective date of the new Rule B5C, i.e. 1 July 2013.

The second recommendation is that the Fire Authority adjust all future pension payments made after 31 March, 2019, to ensure they are calculated and made on the APB basis.

The third recommendation is that the Fire Authority does not recover any overpayment of lump sum or pension made prior to 1 April, 2019.

The second and third recommendations are based on the principle that there is already a precedent set in respect of recovering pension overpayments in the public sector. The general approach taken by public sector pension schemes to this issue has been to reduce future pension payments to the correct level going forward and to waive the repayment of any historic overpayments to avoid financial hardship to members.”

27 CAS-84085-R9H4 Appendix 6 Mrs S provided detailed calculations of the past losses he believed he incurred between 1 July 2018 and 12 April 2022. He also provided a summary of the future losses that he believes he will incur. A summary of these losses is detailed below.

12 This figure is the amount after Mr S deducted the pension payments he had actually received during the same period. 28

Full determination