Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR 79/1/1449 282 index

Date: February 1998

LOCAL GOVERNMENT SUPERANNUATION ACTS 1937 TO 1953 (“the 1937 to 1953 Acts”)

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION (MISCELLANEOUS) REGULATIONS 1973 (“the 1973 regulations”)

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1974 AND 1986 (“the 1974 and the 1986 regulations”)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (“the 1995 regulations”)

1. I am directed by the Secretary of State for the Environment, Transport and the Regions to refer to your notice of appeal submitted under regulation J5 of the 1995 regulations against the decision of XXX County Council (“the council”) on your local government pension scheme (“the LGPS”) benefits.

2. The appeal has been conducted by correspondence. Consideration has been given to your letters of 3 October 1995 and 7 February, 18 and 27 August and 10 December 1996, the council’s of 9 May and 17 May 1996 and September 1997; and to all copy documents enclosed with those letters.

3. The Secretary of State takes the view that the questions for determination is whether any of your pensionable service should be treated as whole-time.

4. From the evidence submitted the following facts have been established:

(a) your date of birth is 20 January 1932;

(b) on 3 November 1969 you started part-time employment with the council as a secretary/administrative officer at XXX’s Junior School;

(c) on 1 September 1971 you became a whole-time pensionable employee in the local government superannuation scheme (now the LGPS);

(d) on 16 February 1995 you were sent an estimate of retirement benefits payable from 20 January 1997;

(e) you were not informed of the effect of the enactment of the 1995 regulations when you received your estimate;

(f) on 12 May 1995 you were referred to the council’s Occupational Health Advisor (“the OHA”);

(g) on 18 July 1995 you were notified that the OHA did not certify permanent ill-health;

(h) in early August 1995 you successfully appealed against the decision;

(i) on 31 August 1995 you retired on grounds of permanent ill-health under regulation D7(2) of the 1995 regulations; and

(j) on 3 October 1995 you appealed to the Secretary of State against the council’s pension award.

5. You contend the following:

(a) that had you retired before April 1995 you would have received a higher pension award;

(b) you expected your pension to be the same as if you had retired at age 65; and

6. The council contend that before you retired you were only given written estimates for retirement at 65 and you were not given an estimate for retirement on ill-health grounds before you were certified as permanently unfit. Furthermore they do not have any record that you were told that you would receive benefits attributable to a 65-year-old.

7. All the representations and evidence submitted have been carefully considered. The Secretary of State is required to determine the same question as to your rights under the regulations which fell to be decided in the first instance by the council. He is acting judicially and has no power to modify the application of the regulations to the facts of the case.

8. When you became a local government pensionable employee, the relevant pension scheme provisions in force at the time were contained in the 1937 to 1953 Acts. As far as is relevant section 40 of the 1937 Act defined a whole-time and part-time officers as follows:-

“ “part-time officer” means an officer other than a whole-time officer ...

“whole-time officer” means ... an officer who devotes substantially the whole of his time to their employment ... ”

The definition of whole-time officer was later amended by regulations 12 and 13 of the 1973 regulations. As far as is relevant the amendment read as follows; “ ... an officer whose contractual minimum hours of employment regularly or usually amount to 30 hours or more in each week ... ”. This definition of whole-time remained in place until it was changed by the introduction of the 1995 regulations which state, as far as is relevant, the following:-

“B3(3) For the purposes of these regulations -

(a) ...

(b) an employee is a whole-time employee if his contractual hours are not less than the number of hours which, in accordance with his terms of employment, is the number of contractual hours for a person employed in that employment on a whole-time basis; and

(4) In these regulations-

“the contractual hours” means-

(i) the number of hours the employing authority are entitled to require the employee to work in each of the contractual weeks ...

(ii) ... (iii) and

“the contractual weeks” means the number of weeks in every period of 12 months for which (on that assumption) a wage or salary is payable to the employee.”

9. It is noted that your pensionable remuneration was calculated as if it were a fraction of the whole-time equivalent as provided by paragraph 7 of schedule D1 of the 1995 regulations which states:-

“7. Subject to ... paragraph 10(2) of Schedule M4, for the purposes of regulation D1 and this Schedule, a member is, in respect of any period of part-time local government employment, to be treated as having received the remuneration which would have been paid in respect of a single comparable whole-time employment.”

That is, your rate of remuneration has been multiplied to arrive at the equivalent rate if you worked a 52-week year. It is noted that you were contractually required to work for less than a calendar year and your service was proportionately reduced to the fraction of a calendar year for which you were required to attend your place of work. This calculation is stipulated by regulation B15(1) for part-time service only as follows:-

“B15.-(1) For the purpose of calculating the amount of any benefit under these regulations-

(a) ...

(b) ... a period of membership in part-time service in local government employment shall be treated as though it had been a proportionately reduced period of membership in whole-time local government employment.

(2) In paragraph (1) ...

(a) and (b) ...

“proportionately reduced” means reduced in the proportion which the number of contractual hours during the period of part-time service in the employment, bears to the number of contractual hours of that employment if it were on a whole-time basis.”

10. It is not disputed when you commenced local government employment you were a part-time employee and worked a 27½ hour week, nor is it disputed that you were treated as a “whole-time employee” under the 1937 to 1953 Acts from 1 September 1971. At the time your employer took the view that under the terms of your contract you devoted “substantially the whole” of your time to your employment. Therefore, you were treated as a whole-time employee and eligible for membership of the scheme under section 3 of the 1937 Act. Amendments contained in the 1973 regulations did not change your position. To qualify as a whole-time employee it required you to work in excess of the 30 hours per week. It has not been shown that your pensionable status changed since then, therefore the Secretary of State takes the view that you were a whole-time employee until you retired. This view applies by virtue of schedule M4 of the 1995 regulations which states, as far as is relevant, the following:-

“7.-Without prejudice to any other provision in these regulations, any period which immediately before the commencement date counted as a period of reckonable service for any purpose of the Scheme ...

(a) ...

(b) if it counted as service in whole-time employment ... shall count as membership in whole-time employment ...

Furthermore paragraph 10(2) states as follows:-

“10.(2) Where, apart from paragraph 7(b), a period of reckonable service in whole-time employment before the commencement date would count on and after that date as a period of membership in part-time employment, then for the purpose of calculating any benefit by reference to that period of service, paragraph 7 of Schedule D1 shall not apply (and accordingly the benefit shall be calculated, in so far as it relates to that period, by reference to pensionable remuneration which has not been increased by virtue of that paragraph.)”

11. The Secretary of State concludes that for the purpose of calculating your pension your membership should be treated as a whole-time from 1 September 1971 and your employment before that date as part-time. The former period falls to be treated as part-time local government employment as provided by the 1995 regulations and reduced as correctly calculated by the council. The period from September 1971 does not fall to be reduced.

12. Consideration is next given to the calculation of your retirement benefits. When you retired Part D of the 1995 regulations provided for the calculation of a person’s pension retirement benefits and state as follows:-

“D1.-(1) A person’s pensionable remuneration ... is his remuneration for so much of the relevant period as he is entitled to count as a period of membership ...

(2) For the purposes of this regulation, the relevant period is-

(a) the year ending with the day on which the person ceases to be a member ...”

In your case the relevant period was 1 September 1994 to 31 August 1995. Your annual pension and lump sum are provided for as follows:-

“D2.-(1) ... in relation to any person-

(a) “standard retirement pension” means a pension payable at an annual rate equal to one eightieth of his pensionable remuneration, multiplied by the length in years of his total period of membership; and

(b) “standard retirement grant” means a lump sum of an amount equal to three eightieths of his pensionable remuneration, multiplied by the length in years of his total period of membership.

(2) and (3) ... ”

From evidence supplied your pensionable remuneration in your last year of service, the “relevant period”, was £13,153.20. Your period of membership in local government employment has been shown to be 26 years 259 days, based on your part-time employment of 1 year 302 days proportionately reduced to 1 year 118 days as provided by regulation B15(1)(b), plus 24 years whole-time, and 1 year 141 days enhancement to offset your early retirement on ill-health grounds.

13. The 1995 regulations provide for enhancement of service where a member retires on grounds of permanent ill-health as follows:-

“D7.-(1) ... where a member who ceases to hold a local government employment-

(a) has a statutory pension entitlement, and

(b) is incapable of discharging efficiently the duties of that employment by reason of permanent ill-health or infirmity of mind or body,

he is entitled-

(i) to a standard retirement pension, and

(ii) to a standard retirement grant,

which are payable immediately on his ceasing to hold that employment.

(2) Where the member’s total period of membership is at least 5 years, he is to be treated for the purposes of this regulation as being entitled to count as a period of membership an additional period calculated in accordance with Schedule D3.”

Schedule D3 paragraph 2 states, as far as is relevant, as follows:-

“(2) The additional membership period is not to exceed the period by which the member’s period of membership would have been increased if he had continued in the employment which he has ceased to hold until-

(a) he attained the age of 65 years ... ”

With the enhancement provided by Schedule D3, your pensionable remuneration by D1, and the formula for your “standard retirement pension” provided by D2, the calculation of your annual pension can be summarised as follows:-

1/80 x £13,153.20 x 26 259/365 years = £4,391.50.

Three times your annual pension gives your lump sum or “standard retirement grant” of £13,174.50.

14. With reference to paragraph 3 the Secretary of State determines that your pension must be calculated on the basis of whole-time membership from 1 September 1971 using actual pensionable remuneration for the relevant period. He therefore allows this appeal as set out above.

15. A copy of this letter has been sent to the council.

16. The above constitutes the Secretary of State’s determination of this case. It is final and cannot be changed except by a judgement in the High Court. As the Secretary of State’s jurisdiction is now at an end, officers may not discuss or comment on the case further.