UK - The Scottish government has pledged £32m (€40m) to meet the extra cost of revised pension arrangements for Scottish police and firefighters, after claiming the UK Treasury refused to fund the changes.

Pension commutation tables for the police and firefighter schemes - which set the lump sum payment members can receive in exchange for giving up a part of their pension - were recently reviewed and revised by the Government Actuary's Department (GAD).

The UK government confirmed in May 2008 the new commutation tables, which take into account increased life expectancy, would be applied for officers retiring in England and Wales from 1 July 2008, and retrospectively for members that retired after 1 October 2007.

Increasing life expectancy meant members were giving up more than they were receiving, so the new tables will produce higher payments and therefore higher costs.

However, while the commutation tables apply across the whole of the UK, but the announcement only stated England and Wales - with no mention of Scottish arrangements - would receive additional funding to pay for the changes.

The Scottish Parliament has the power to make and amend rules relating to public pension schemes but the Scottish Executive at the time refused to confirm the new tables would apply to members as HM Treasury had not made a commitment to provide similar funding to that given to England and Wales.

Kenny MacAskill, Scotland's justice secretary, has now confirmed the Scottish government is willing to provide £32m to backdate the changes to 1 October 2007, and ensure police and fire service boards will have the necessary resources to meet the extra costs in 2008/09.

He said: "We need to put an end to the uncertainty that has been caused by the Treasury's refusal to treat our police officers and firefighters the same way as their colleagues south of the border. They have been short-changed by the UK government.

"While we will continue to press the UK government to fund the pension commutation arrangements, the Scottish government has moved quickly to end the uncertainty. This is the right and proper thing to do for our hard-pressed police and fire services," added MacAskill.

But while the announcement of the funding resources was welcomed by police and fire organisations, Calum Steele, general secretary elect of the Scottish Police Federation (SPF), said the two-month delay was "unfortunate".

"I understand the critical importance of 'who pays?' However HM Treasury should be providing funds for Scotland to meet these costs as it did for England and Wales," added Grant.

The issue of pension funding for Scottish police officers, which is managed individually by the regional police forces rather than through one central fund, sparked concerns earlier this year when Grampian Joint Police Board revealed it had a pension shortfall of £1.143m which had to be 50% funded from the general police budget. (See earlier IPE article: Police push for centralised scheme)

Steele added: "The whole question of police pensions funding in Scotland has to be addressed. We need to create a central fund like they have in England and Wales rather than rely on the annual police authorities budgets."

MacAskill admitted the Scottish government is "also addressing the longer-term pension issues", and is conducting discussions with police and fire service representatives and with the Convention of Scottish Local Authorities (COSLA), in the hope of reaching "a joint solution soon".

HM Treasury was unavailable for comment at the time of publication.

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