Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • May 2015
05

Firefighters receive compensation after pension calculation failure by Government Actuary's Department 

Open-access content Monday 18th May 2015 — updated 5.13pm, Wednesday 29th April 2020

More than 5,000 retired firefighters will be compensated following a test case involving pension errors by the Government Actuary’s Department (GAD).

2

The Pensions Ombudsman, an independent organisation that investigates complaints about pension administration, said GAD failed to review commutation factors within the firefighters' pension scheme.

Commutation is a procedure where a member of a pension scheme gives up part or all of their pension in exchange for a lump sum. Commutation factors set the rate at which the exchange is made. 

The ombudsman said William Milne, the retired firefighter in the test case, was entitled to a pension of £29,610 and chose to commute the maximum amount of pension. 

He received a commuted tax free lump sum of £111,038 and a pension of £22,207. When Milne retired in November 2005, the terms of the commutation had been in use since 1998.

According to GAD, at a review in 1998, it had recommended commutation factors should be reviewed in three years' time, but no review took place in 2001.

The ombudsman said the complaint should be upheld because GAD failed to review the commutation factors from 1998 to 2006 applicable to the calculation of the lump sum which Milne was entitled to receive.

In addition, the ombudsman said GAD had the responsibility to maintain and review the commutation factors and should have done so proactively. 

The ombudsman ordered that a new commutation factor be prepared for Milne as if a factor review had been carried out in December 2004, and GAD should compensate the firefighter for the loss of money and any tax liability. 

The Fire Brigades Union (FBU), which supported more than 5,000 of its retired members who were affected, said due to the number of complaints involved, the Pensions Ombudsman decided on a test case. Milne's case was chosen as a lead complaint. 

Matt Wrack, FBU general secretary, said this was a "significant victory" for retired firefighters.

He added: "As the outcome has just been announced the FBU will be looking at the details and discussing the decision with its legal advisors."

GAD has prepared tables for use in the calculation, 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". 

In addition, GAD said it had put in place internal controls to ensure its responsibility to review commutation factors in future. 

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."

This article appeared in our May 2015 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

Ros Altmann appointed as new pensions minister

Pensions expert Dr Ros Altmann has been appointed as the new pensions minister replacing Steve Webb who lost his seat in last week’s election.
Tuesday 12th May 2015
Open-access content
2

Majority of UK workers 'failing to prepare' for retirement

The majority of UK workers are not prepared for retirement, with only 7% “on course to meet their retirement goals”, says pensions adviser Aegon.
Tuesday 19th May 2015
Open-access content

Pensions minister urged to increase private pension age to 60 in 2024

Ros Altmann, the new pensions minister, has been urged to increase the private pension age to 60 in 2024, according to the Centre for Policy Studies (CPS).
Friday 15th May 2015
Open-access content
2

Pension schemes will stay in deficit for longer as recovery plans are 'blown off course'

Many defined benefit (DB) pension schemes with actuarial valuations this spring will find recovery plans for any deficit have been blown off course, says Towers Watson.
Wednesday 13th May 2015
Open-access content
2

Uncertainty over EU referendum makes life difficult for trustees

Pension trustees preparing to comply with the revision of the EU directive on Institutions for Occupational Retirement Provision (IORP) are facing challenges as a result of the UK’s Europe in/out referendum, an event was told.
Friday 29th May 2015
Open-access content
2

'Poor pension member engagement due to shameful lack of financial education'

More people are making inquiries to transfer from defined benefit (DB) to defined contribution (DC) pension schemes but not many are switching.
Friday 29th May 2015
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from May 2015

2

Solvency ii webinar

Webinar from The Actuary
Wednesday 10th June 2015
Open-access content
2

EU referendum outcome would have 'significant impact' on pensions, insurance and investment, warns IFoA

The result of a referendum on the UK’s membership of the EU could have a significant impact on how actuaries work, according to the IFoA.
Thursday 28th May 2015
Open-access content
2

Solvency II: standard formula will fit most UK firms but should not be default option

The standard formula should be a “good fit” for most UK insurance firms when complying with Solvency II, but firms still need to assess whether it is appropriate, an actuary has warned.
Thursday 28th May 2015
Open-access content

Latest from small_opening_image

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content

Latest from inline_local_link

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content

Latest from 05

2

Solvency ii webinar

Webinar from The Actuary
Wednesday 10th June 2015
Open-access content
2

EU referendum outcome would have 'significant impact' on pensions, insurance and investment, warns IFoA

The result of a referendum on the UK’s membership of the EU could have a significant impact on how actuaries work, according to the IFoA.
Thursday 28th May 2015
Open-access content
2

Solvency II: standard formula will fit most UK firms but should not be default option

The standard formula should be a “good fit” for most UK insurance firms when complying with Solvency II, but firms still need to assess whether it is appropriate, an actuary has warned.
Thursday 28th May 2015
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Shape the Future of Insurance

London (Central)
£ excellent package
Reference
149090

Senior Pricing Actuary - Life Reinsurance

London (Central)
£ excellent
Reference
149089

Insurance Investment Leadership Opportunities

Flexible / hybrid with 2 days p/w office-based
£ dependent upon experience
Reference
149088
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ