Following the Pension Ombudsman determination in Milne v GAD we have had several queries from members around various associated issues particularly in relation to the interest payable and the amount of commutation taken at the time of retirement.
As a result of those queries we have taken further legal advice on the matters. Please use the link below to access that advice.
We have now been made aware that the Home Office have now advised Pension Administrators that those due additional lump sums are no longer required to sign a discharge letter before the payments can be made.
This concurs with the legal advice we obtained and shared with the Home Office [see previous post].
Those who are to receive payments should still check the payment is correct and if necessary request the actual calculation made by the Administrator to verify the amount. Pension Administrators should now be working to make these payments as soon as possible without any further delay.
Some members have started receiving their additional commutation figures and discharge letters and as such we have obtained legal advice on the validity of the discharge letters and have been advised:
To be clear, the only potential respondents to a further claim are GAD and the Home Office. The only relevant discharge relates to a possible claim against them. The request for a discharge against GAD and the Home Office is consistent with GAD guidance on settlements that I have seen. Naming the force or any pension fund is unnecessary, but harmless. The first point to make is that any form of discharge is not called for. The Home Office is obliged to pay the additional commutation payment under the Police Pensions Regulations. GAD is obliged to pay any tax due, and to pay interest, following the Milne determination. If the Home Office refused to pay without a discharge it would be in breach of the Regulations; if GAD refused to pay without a discharge, the Ombudsman would force it to. That would take time however, and interest is only running at bank base rate. If the discharge letters are acceptable, there is no harm in signing them and getting earlier payment, even if the discharge is unnecessary.
The advice also suggests that members should check the calculation made by the administrator and if not shown on the letter members should request that calculation so they can be satisfied that the amount due is correct before signing.
LATEST UPDATE FROM MOUCHEL
Use the below link to view an update provide by Mouchel who administer a number of Police Pensions for Forces around the country. This includes some likely timescales on payments and notifications.
Please note Mouchel do not administer all Forces Police Pensions.
Please use this link to see a further update from the Ombudsman in relation to other associated issues in the Commutation Factor dispute.
The Home Office have issued an update in relation to queries raised regarding the implementation of the revised commutation factors. Use the link below to view the latest.
Following the determination of the Pensions Ombudsman in Milne v the Government Actuary’s Department (GAD), this document, provided by GAD, includes tables of factors to be used in calculating redress and detailed guidance for scheme administrators to aid them in calculating the amounts owed to individuals. Use the link below to view the document:
The document confirms than men who retired on or after 1/12/2001 will receive additional amounts, Unfortunately it confirms that only women who retired on or after 1/12/2004 will receive additional amounts - this is becaause the factors in the new 2001 tables are less than the factors that applied to women post 1998.
NARPO have now received a response from the Home Office in relation to the commutation factor dispute in which they confirm that Force Pension Administrators are now working to identify those affected, calculate the sums owed and ensuring that payments are made as soon as possible.
GAD have issued a further update in relation to the commutation factors and the process of payments. Click on link below to view:
NARPO are pleased to note that we have now received a response from the Treasury in which they confirm that the Government accept the determination in full - not only in relation to Mr Milne but also in relation to the other individuals potentially affected by the determination.
They also confirm that Police and Firefighter Pension Scheme Administrators are now working to identify affected individuals and will ensure that payments are made as soon as possible.
We would encourage Members to be patient in this matter and not overburden Administrators with queries at this stage allowing them to get on with the task in hand as quickly as possible without distraction.
A copy of the letter can be seen by clicking the below link.
Following the publication of the Pension Ombudsman’s Determination into his investigation of a complaint of maladministration by the Government Actuary’s Department failure to regularly review police and firefighters pension commutation factors we have received a high volume of enquiry about the outcome and implications for individual members of that determination.
The below link gives a brief history of the complaint and addresses, in particular, the question of further complaint about historic commutation factors. The views expressed in the document, in particular about further complaint, are based on comments made by the Ombudsman in his determination.
A short Commutation factor Q and A received from the Police Pensions Team at the Home Office can be viewed by using the link: Q and A
We have published the final decision on the complaint made by Mr Milne against the Government Actuary’s Department (GAD) about the factor used to convert his pension into a lump sum at retirement and whether the factors should have been reviewed earlier than they were.
Tony King, the Pensions Ombudsman, has decided in Mr Milne’s favour. The Pensions Ombudsman decided that the factors should have been reviewed between 1998 and 2005, when Mr Milne retired. He has directed GAD to assess what the factor would have been in 2005 if reviews had taken place and to notify the administrator of the relevant part of the Firefighters’ Pension Scheme so that they can recalculate the cash sum. He also directed GAD to pay interest on any additional cash sum, from Mr Milne’s retirement date.
See more at: PENSION OMBUDSMAN
The Government Actuaries Department [GAD] have prepared a technical note that includes the following:
The Ombudsman notes that, whilst his findings in the Determination are limited to Mr Milne’s complaint, the principles are the same for other retired firefighters and police officers. To avoid further cases having to be heard, he expects government to make arrangements for payments to be made to others affected, reflecting the more beneficial terms that would have applied had commutation factors been reviewed and, where appropriate, revised at the appropriate times. GAD has prepared tables for use in the calculation of redress, based on a best reconstruction of the commutation factors which would have applied if factors had been reviewed and revised at 1 December 2001 and at 1 December 2004. The mortality and related assumptions used in the development of these tables have been reviewed by an independent firm of consulting actuaries who have confirmed that the assumptions fall within the range that GAD might reasonably have chosen if it had prepared revised commutation factors at these dates. These tables will be passed to the relevant government bodies.
So it would appear that new factors should be applied to all those who retired after 1st December 2001 and those factors should be recalculated for those who retired after 1st December 2004.
Full GAD technical note available HERE
From the tone of the Ombudsmans determination and GAD's technical note it is obvious that they envisage and encourage this matter to be resolved as soon as possible and those eligible should be reimbursed the monies owed at the earliest opportunity. Extract from Ombudsman determination below:
There are also members of the Police Pension Scheme with the same interest. They will have retired at different points in time, so the result in Mr Milne’s case may not exactly apply to them. (The factors are also age and gender dependent, of course.) However, the principles are the same.
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 mentioned above. However, bearing in mind GAD’s recent detailed work on what the factors should have been in 2001, I have every hope and expectation that GAD, the Department and all other interested bodies, including those representing fire and police authorities, will swiftly jointly consider what steps should be taken to ensure that further determinations are not necessary. That may involve discussion as to where liability lies, particularly as following the division of liability above is likely to be administratively burdensome. However, the particular public sector pocket or pockets used to make payments from is of no significance to the members. So I strongly recommend that the question of where liability ends up should be regarded as secondary to the members receiving as soon as possible such payments as they will be due.
A HM Treasury spokeswoman said the ruling would also have implications for police pensions. “The government accepts the Pensions Ombudsman’s determination in full and will ensure that the directions made in relation to Mr Milne are taken forward in due course,” she said.
“The government recognises that there may be other individuals who are potentially affected by the principles set out in this determination. Firefighters’ and police pension schemes across the UK will work to identify such affected individuals and ensure that appropriate payments are made.”
See more at: THEACTUARY
AT THE MOMENT WE ARE HOPEFUL THAT THESE PAYMENTS WILL BE MADE TO THOSE ELIGIBLE AUTOMATICALLY WITHOUT THE NEED FOR INDIVIDUALS TO CONTACT THEIR PENSION ADMINISTRATOR.
IF THAT SITUATION CHANGES AND INDIVIDUALS NEED TO ACT WE WILL UPDATE THE WEBSITE AT THE EARLIEST OPPORTUNITY.
Commutation Factors Background
The announcement of new commutation factors for the police pension scheme made at the Police Federation Conference in May 2008 resulted in a legal challenge to the original commencement date of those factors. The Judicial Review taken by the Police Federation was successful in achieving a new commencement date for those factors of December 2006. Throughout the legal process we kept members informed of progress with the challenge.
Members will be aware that the Fire Service Pension scheme is similar to the Police scheme. From the initial announcement of the ‘new’ factors in 2008, the Fire Brigades Union have taken a different approach to this issue and have encouraged their former members to complain of maladministration of their scheme as no increases to commutation factors took effect from 1998 until the recent increase. We are aware that a number of former police officers are in the process of making similar complaints. We have been in touch with the Pension Ombudsman’s office about this matter and the below statement is published on their behalf in an attempt to assist them. We will continue to be in contact with the Ombudsman over this matter and will consider publishing further advice once the Judicial Review process referred to in the statement is finalised.
‘A number of fire-fighters have complained to the Pensions Ombudsman that the tables of commutation factors of the Firefighters’ Pension Scheme should have been revised by the Government Actuary’s Department (GAD) earlier than they were in 2006, which would have resulted in larger lump sum benefits when they commuted part of their pensions on retirement. Whether GAD is within the Pensions Ombudsman’s jurisdiction is now the subject of court proceedings. Until those proceedings have concluded, which could be as late as autumn 2012, the Pensions Ombudsman cannot investigate the Firefighters’ complaints. The same applies in respect of similar complaints about the Police Pension Scheme. So the Pensions Ombudsman has said that it is reasonable for members not to submit such complaints to him between now (December 2011) and when those proceedings have concluded. If former police officers submit such a complaint to thePensions Ombudsman after proceedings have concluded, the timefrom December 2011 to when those proceedings are concluded, will not count when the Pensions Ombudsman looks at whether the complaint has been made in time.’