Fire Pensions: Big Trouble in the UK (Part 1)

United Kingdom public sector workers, including firefighters in England, Scotland, Wales and Northern Ireland are engaged in a titanic national struggle with the “Coalition” government made up of the Conservative Party and Liberal Democrats. The Coalition is currently set on weakening pension benefits.

(These Liberal Democrats are not the ones your mother warned you about, but rather a political party that would be generally happy with a moderate conservative as their leader.  Think Nelson Rockefeller in Lady Thatcher’s pumps.)

The Coalition, led by David Cameron, is moving aggressively to re-design public pensions as a deficit reduction or “cost saving” measure on a national level.  It is a perfect storm with very real life implications.  We should be aware of what is taking place as bad news (and policy) travels fast, even across the Atlantic.  The Coalition argument is that retirement ages for current pension plans were created early in the 20th century when life expectancy was much lower.  They are aiming to change the pension fundamentals so that firefighters and other workers will work longer and often receive less when they eventually do retire, at a later age.

Their attack is centered largely on arguments of sustainability, fairness and employee contribution rates.  They say that the current arrangement cannot be maintained for the long run and that public pensions are more lucrative than their private counterparts.

North American Pensions

A quick take on what US and Canadian firefighters often have as a pension framework:

–  mandatory participation in a pension plan where the monies are invested and where the pension, once received, is subject to a cost-of-living-adjustment (COLA) to offset the effects of inflation

–  Retirement after a set number of years, some beginning with 20 years of service, though 25 may be more the norm and in some cases there is also a tandem age requirement of 50 or 55

(Thousands of US firefighters do not participate in Federal Social Security making their work pension the only source of guaranteed income.  Some Canadian pension plans are integrated with their federal benefit where reductions can occur after age 65.)

UK Pensions

In one of those perfectly understandable language differences that makes it all interesting and sometimes amusing, the UK equivalent of “plan” as in pension plan, is “scheme”, as in pension scheme.  There are basically three firefighter pension schemes in the UK:

–  Firefighter Pension Scheme (FPS) closed to new entry since 2006 with a retirement age of 55, (which could occasionally be lower)

–  New Firefighter Pension Scheme (NFPS) for all hired after 2006, with a retirement age of 60

–   Local Government Pension Scheme (LGPS) with a retirement age of 65

Tomorrow- Firefighter Pensions:  Big Trouble in the UK (Part 2)

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