Firefighters are entitled to increased pensions if they earn additional pay for working overtime or taking on extra duties, according to a High Court ruling which could have far-reaching implications for other public sector workers.
On Friday, the court ruled that firefighters in Wales were entitled to have the additional pay they received for training and additional shift arrangements considered pensionable.
Firefighters are regularly paid an additional allowance for accepting shifts up to 42 hours longer than their standard contracted hours, or for working extra hours in their fire authority’s training school.
The Mid and West Wales Fire and Rescue Authority argued that certain aspects of additional payments were not pensionable because the arrangements could be ceased at any time and were not permanent.
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But the High Court ruled the payments were regular, even if they could be revoked in the future, meaning they were pensionable. It ordered the fire authority to make pension contributions retrospectively.
Complaints were originally made to the Pensions Ombudsman by four firefighters. Nigel Bradshaw, a pensioner member of the Firefighters’ Pension (Wales) Scheme, argued that a training allowance had not been treated as pensionable pay.
Nathan Booth, another firefighter, said the fire authority was obliged to treat his daily crew allowance as pensionable pay, which it was doing in part on a discretionary basis.
A third firefighter, Simon Jones, complained the authority was obliged to treat the whole of his self-rostered crewing allowance as pensionable pay, rather than just part of it.
And Derek Skhane complained his urban search and rescue allowance was not treated as pensionable pay.
In October, the ombudsman upheld the complaints of Bradshaw and Skhane but dismissed those of Booth and Jones. He noted the fire authority was, in fact, treating the day-crewing allowance and part of the self-rostered crewing allowance as pensionable pay even though, as a matter of law, it was not obliged to do so.
The latter two firefighters appealed against the ruling, while the fire authority appealed against the rulings for Bradshaw and Skhane.
The High Court upheld the fire authority’s appeal in the case against Skhane, and Justice Fancourt said the allowance was “not pay in relation to the performance of the duties of a regular firefighter’s role”.
But Fancourt ruled, regarding the other three firefighters, that the whole-of-the-day crewing allowance and the self-rostered crewing allowance were pensionable pay.
Matt Wrack, general secretary for the Fire Brigades Union which supported the Welsh firefighters, said it represented a “major victory” and was “one small step in the battle to reclaim fair pensions for firefighters across the country”.
“When a firefighter regularly carries out additional paid work, that pay should be factored into their pension, regardless of whether it is part of their core role,” Wrack said. “The government must act now to ensure that firefighters across the country have these payments included in the calculation of their pensions.”
The National Firefighters’ Pension Scheme (NFPS) regulations define pensionable pay as the aggregate of the “firefighter member’s pay in relation to the performance of the duties of the firefighter member’s role, except any allowance or emoluments paid to the firefighter member on a temporary basis”.
The ruling could have wider implications for thousands of workers across the public sector who regularly undertake overtime and utilise defined benefit schemes. At present, for example, the NHS Pension Scheme and schemes covering police forces do not routinely count overtime as pensionable pay.
Nathan Long, senior analyst at Hargreaves Lansdown, told People Management he would be “gobsmacked” if trustees in public sector pension schemes were not asking for clearer definitions of pensionable pay on the back of the ruling.
“The key here is that trustees are aware of the pensionable pay rules of their schemes, and there is potential for that to be challenged where that is not clear,” Long said.
He added the specifics of many defined benefit schemes may have been set years ago and might not have taken account of training or overtime requirements that emerged over time.
“The cost of not doing that is potentially enormous because you have to change the benefits for everyone and have to backdate those benefits,” Long said. “You need to be absolutely watertight on what is and is not pensionable.”
But Steve Webb, former pensions minister and current director of policy at Royal London, said employers needed to be careful about inferring a general principle from one specific case.
“In this case, the court seems to have decided that the additional shifts were an integral part of the work of the firefighter and therefore should be pensionable, but this does not mean that all public sector overtime suddenly becomes pensionable,” Webb said.
Webb added clarity was needed for workers and pensioners, and suggested all schemes review their rules to see if they required clarification in light of the ruling.
Mid and West Wales Fire and Rescue Service said it was currently considering its position in relation to any future appeal.