A recent High Court case has ruled on the test for deciding whether a member has retained a "protected pension age" of 50 following the increase in "normal minimum pension age" from 50 to 55 (Devon and Somerset Fire and Rescue Authority v Howell).
This update covers the legal position in England and Wales.
"Normal minimum pension age" (NMPA) is the earliest age at which (in the absence of ill-health) a member can receive benefits from a registered pension scheme without them being treated as unauthorised payments. NMPA increased from 50 to 55 on 6 April 2010, but the legislation includes transitional provisions allowing a "protected pension age" of 50 to be retained in certain circumstances.
The member, Mr Howell, was a Chief Fire Officer who was a member of the Firefighters Pension Scheme. It was common ground that he only qualified for a protected pension age of 50 if, as at 5 April 2006, he had an "actual or prospective right" to benefits under the scheme from age 50. Under the scheme rules applicable to Mr Howell, the right to take early retirement from age 50 did not apply unless his notice of retirement was given with the permission of the fire and rescue authority. In Mr Howell's case, the authority gave permission in 2010, but subject to the condition of any pension before age 55 not being an unauthorised payment.
The judge held that to be an "actual" right to a benefit within the meaning of the legislation, the right had to be an immediate right to the benefit and subject to no contingencies. A future right to benefits would in principle be a prospective right. The fact that the future right was dependent on natural events such as the member attaining a certain age would not stop it being a prospective right. Equally, the right being subject to contingencies that were wholly within the member's control (eg not taking up certain types of employment or not making certain elections under the scheme rules) did not stop the right being prospective. However, a condition requiring consent or permission of a third party would mean there was no "prospective right" to a benefit within the meaning of the legislation. The judge held that in Mr Howell's case, the requirement for the fire and rescue authority to give permission for the notice of retirement meant that Mr Howell did not have a prospective right to a benefit from age 50. Mr Howell's NMPA was therefore 55, not 50.
Questions as to whether members have a right to benefits from age 50 continue to arise in practice. From 6 April 2028, NMPA is due to increase to 57 for most members, subject to transitional provisions, so this is likely to throw up further questions regarding the retention of lower NMPAs. The increase in NMPA to 57 does not generally apply to pension schemes established for the benefit of the armed forces, police or firefighters.
Partner, Head of Pensions