How generous are firefighters' pensions?

Public sector pension reform began with a paragraph, became a 200 page report, later passed through parliament and this year became law. For firefighters, however, this hasn't turned out to be the end of the story.

Instead, last month the Fire Brigades Union (FBU), which represents 85% of uniformed staff of the UK fire and rescue service, voted to strike over the government's position on firefighters' pensions.

The FBU opposes the pension reforms that have been put forward, saying it involves "unaffordable and unfair contribution rates", "a totally unrealistic retirement age for firefighters" and "an unsustainable scheme for the fire service".

Meanwhile, the government argues it's a generous offer. Minister Brandon Lewis was quoted as saying:

"After two years of discussions and improved terms, firefighters will still get one of the most generous public service pensions available - £26,000 a year, when including the £7,000 state pension."

£26,000 - generous?

Many people would consider this sum - roughly equivalent to the median annual earnings for an employee - as generous for a pension, and more so when considering a 'competent' (fully trained) firefighter can expect an annual salary of just under £28,500.

But a closer reading suggests this is an unrealistic sum for most firefighters. First of all, £7,000 in state pension has been added, but the State Pension is only payable at state pension age (65 and rising), whereas the government's current proposals suggest an occupational retirement age of 60. So in reality, the government's example firefighter would only be getting £19,000 a year when they actually retire.

So a better question is whether £19,000 is a 'normal' pension for a firefighter.

£19,000 - normal?

That's where things get tricky - currently most firefighters will be under one of two schemes - the Firefighters Pension Scheme (1992) and the New Firefighters Pension Scheme (2006). Two-thirds of scheme members find themselves in the former.

A firefighter under the 1992 scheme gets a pension worth a fraction of their final salary, dependent on their length of service. The most they can get is 2/3 of their salary. Someone earning £28,500 retiring with 20 years of service would receive a pension of £9,500 a year, but a colleague on the same salary who had spent 30 years as a firefighter would get an annual income of £19,000. The only way a firefighter could receive a pension larger than £19,000 per year is through additional contributions from their own income.

The 2006 scheme changed this so that the pensions pot accrued more slowly - after 30 years the pot would only be worth £14,250 (with no additional contributions) but goes up to £19,000 after 40 years (and can still grow after 40 years).

So at the moment, a firefighter gets the kind of pension the government is talking about if they serve 30-40 years and have a final salary of around £28,500 (though some will finish on higher salaries if they're promoted to managers, and so get higher pensions anyway).

Under the new proposals, firefighters contribute more, get a pension based on their career average earnings rather than final salary, and accrue their pot at a slightly faster rate for each year of service. For long-serving staff, the outcomes are similar: a firefighter serving for 40 years earning about £28,500 on average over the course of their career gets about £19,000 per year for a pension.

40 years service - realistic?

Serving 40 years without any reduction for early retirement normally means joining the fire service not much later than age 20 and working up to the proposed retirement age of 60 (the same as the 2006 scheme but five years higher than the 1992 scheme).

Figures on what a 'normal' service length is aren't readily available, although the government suggested in 2011 that only 1% currently work past age 55. The FBU and others have argued that since uniformed ocupations such as the fire service require a certain level of physical fitness, the normal pension age shouldn't be this high in the first place - so for most firefighters 40 years would put them beyond adequate fitness for the service.

The evidence they cite is a 2012 review of how firefighters' abilities change with age. The study analysed existing literature and found that, based on data from four fire services, at 50-54 years of age half of firefighters were below a 'minimum standard' of fitness, while two thirds fell below it at 55-60 years (this isn't a universally agreed measure, so the research used existing practices as a benchmark).

The evidence isn't conclusive about exactly how many firefighters can be expected to fall away from fitness standards in their 50s but does suggest this will be an issue for many trying to clock up the 40 years' service required to reach the Minister's example.

So whether or not we could expect most firefighters to receive the £19,000 upon retirement is perhaps a more contentious issue than the Minister suggests.