Shropshire fire service pension contributions sky rocket
PENSION contributions paid by Shropshire’s fire service are expected to sky rocket from £70,000 next year to £750,000.
Service bosses blame the introduction of career-average pensions for public-sector workers and the decline in the value of the pound for the rise due in the 2020-2021 financial year.
They also say plans to buy new vehicles and fire protection equipment will save money on leasing and maintenance.
In her report before the Shropshire and Wrekin Fire Authority resources committee, finance head Joanne Coadey wrote: “Members will be aware that reforms have been made to public service pension schemes, and that new career average revalued earnings schemes were introduced in April 2015.”
Another reason for the higher future figures is the projected weaker value of future currency.
“The discount rate used to calculate the present value of future money was reduced from three per cent to 2.8 per cent in the 2016 budget, and is expected to reduce again from April 2019 to 2.4 per cent,” she wrote.
“This means that future money is now worth less.
“This change has had the greatest impact on the changes proposed for the employer contribution rates.
“Information provided to date suggest that the average employer contribution rate for the fire schemes will increase from 17.6 per cent to 30.2 per cent by April 1, 2019.
Costs
“The impact on the fire sector as a whole will be an increased cost of £107 million from 2019-20. It is understood the Treasury will cover £97m of the costs in the first year, and the costs in the years following will be taken into account in the Comprehensive Spending Review from 2020-21.
“A high level calculation for this authority indicates that the additional costs from 2020-21 may be between £750,000 and £1 million, and work is ongoing to establish how this cost can be covered.”
Shropshire Fire and Rescue Service chief officer Rod Hammerton said: “The positive news is that we aren’t alone.
“The police and large parts of the health service all have unfunded pension schemes.”
Ms Coadey’s report said that new personal protective equipment was bought in 2014, resulting in considerably lower annual maintenance and repair costs of £30,000 a year, and, as leased vehicles are phrased out, the authority will make an average annual saving of £69,000 between 2020 and 2023.
These and other savings mean the budget is set to peak in 2020-21, at £20.7 million – £66,000 higher than this year’s.
