The Welsh government has confirmed that it will move forward with changes to employee contributions within the Welsh Firefighters' Pension Scheme, with plans to make and lay amending regulations that will come into force on 1 September 2025.   

A consultation on the proposed changes was held last year, after the Government Actuary’s Department (GAD) identified at the last valuation exercise that the yield achieved by the scheme was slightly lower than required at just under 13 per cent. 

This meant that the contribution rate structure needed to change in order to achieve the 13.2 per cent contribution yield at the next valuation exercise. 

But as employee contribution rates are a protected element under the Public Service Pensions Act 2013, Welsh Ministers were required to consult with those impacted to gather further views on consult the persons who appear to be likely to be affected.

The consultation outlined a range of possible changes to the current employee contribution rate structure to achieve the target contribution yield, whilst aiming to provide the best and fairest option for members as a whole.

This included options to adjust current contribution rate bands, to base contirbutions on marginal rates, and plans to link contributions to grade structure as set out in the Firefighters Terms and Conditions of Service.

The Welsh government has since published its response,  which revealed that the majority of respondents agreed that contribution rates should be based on grade rather than by financial banding, suggesting that this approach would be more easily understood by firefighters and has the added benefit of being future-proofed.

However, the government acknowledged that there were concerns that the contribution rates set out in the illustrative example showed a significant increase in contribution rates between the bands, particularly for higher-paid scheme members, which could potentially be seen as unfair. 

In light of this, the GAD has since produced revised contribution rates, which provide a more gradual increase in contributions at all grades.

In order to remain consistent with the underpinning principles, the lowest-paid scheme members will see a slight increase in contribution rates, with rates increasing progressively for higher grades.

The Welsh government's response confirmed that, following numerous discussions with members of the Firefighters’ Pension Scheme Advisory Board for Wales (SABW), representatives from both employers and trade unions have agreed on these revised contribution rates.

This is not the only change since the initial consultation, as the government's response also acknowledged that there were concerns that the proposed implementation date of 1 April 2025 may not allow scheme managers sufficient time to make necessary adaptations to the administrative process and to inform scheme members of the proposed changes and reasons for introducing a new structure. 

Given this, it confirmed that the Welsh government will implement the new employee contribution rate structure from 1 September 2025, in order to allow scheme managers to implement the necessary administrative changes and communicate the change in contribution rate to scheme members.

However, other areas of feedback were not able to be incorporated, as the Welsh government's response noted respondents' comments about consistency with other firefighters’ schemes in the UK and agreed that this is desirable.

"However, there are likely to be differences across the UK in the levels of increase in contributions that are needed to achieve the target yield," the response stated.

"So, adopting the same changes would mean either that one or more schemes would not achieve the target yield, and/or that firefighters in some parts of the UK were paying higher contributions than necessary."

The government also emphasised the need to reflect differences in the workforce, principally the higher proportion of retained duty firefighters in Wales (around 55 per cent of the workforce, compared to 30 per cent in England). 

"Overall, our primary aim has to be to provide a scheme which is fair, equitable and affordable for firefighters in Wales, not to facilitate cross-border transfers within the UK," it stated.

The UK government previously consulted on similar changes for Firefighters’ Pension Scheme (England) Regulations 2014, although the outcome for this consultation is yet to be published. 

---