New data shows that a controversial practice that allows fire service bosses to dodge tax has been used in 13 fire and rescue services. The government has formally discouraged the practice in England.
The practice involves predominantly senior fire officers retiring and then being re-appointed into the same or a similar post, in arrangement with their employer and allowing them to save tax and draw down from their pensions early.
The practice allows them to access a quarter of their pension pot as a tax-free lump sum and then return to post and cease paying employee pension contributions (including any tax payable).
Senior fire officers are more likely to be able to make arrangements with their fire and rescue service to allow the practice to take place.
The 13 services include London, the biggest wholetime fire service in the UK, where five high-level ranking officers including the Commissioner have retired then been re-engaged in the service.
Matt Wrack, Fire Brigades Union general secretary, said: ‘It is outrageous that bosses in fire and rescue services are being allowed to rob taxpayers in this way. It’s deeply unfair and unjust, that bosses on six figure salaries are making cosy agreements that the firefighters they preside over could never hope for. FBU members will be furious that this is continuing despite the government formally saying it shouldn’t. FBU members have suffered pay restraint for over a decade, with chief officers standing idly by and doing nothing to demand better for their employees. That bosses have been able to play the system to make themselves even richer when ordinary workers are struggling to make ends meet is truly abhorrent.’
In the practice the employing fire and rescue authority also ceases to pay pension contributions, also costing tax.
The fire and rescue services that reported that the practice is being or has been used are:
The government, in the 2018 Fire and rescue national framework for England following a consultation, formally discouraged this practice and affirmed that it should be utilised only in ‘exceptional circumstances when such a decision is necessary in the interests of public safety’.
The data comes from Freedom of Information requests made by the Fire Brigades Union.
Please note that some of these occurrences of retire and rehire took or may have taken place before the government’s formal discouragement.