Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR 79/1/1622 384 INDEX

july 1998

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (“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 Pension Authority (“the XPA”) to reduce your benefits under the local government pension scheme.

2. The appeal has been conducted by correspondence. Consideration has been given to your letters 26 September and 22 December 1996; the XPA’s letters of 24 October and 13 December 1996; XPA District Council (“the XXX”) letters of 22 November 1996 and 7 January 1998 and to all copy documents enclosed with those letters.

3. The Secretary of State takes the view that the question for determination is whether your pension fell to be reduced by virtue of regulations E15 of the 1986 regulations and D15 of the 1995 regulations.

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

(a) your date of birth is 20 September 1942;

(b) on 2 December 1992 you received an annual retirement pension of £7,450.25 under regulation E2(1)(b)(iii) of the 1986 regulations from the XPA following voluntary early retirement;

(d) on 28 April 1993 you wrote to the XPA informing them that you had obtained a job with XXX;

(e) on 4 May 1993 you began employment with XXX on an annual rate of remuneration of £6,219;

(f) you were contracted to work 18.5 hours per week part-time except for intermediate periods;

(g) from 24 October 1994 until 30 June 1995 you worked full-time on an annual rate of pay of £13,299;

(h) from 21 August until 1 September 1995 you worked full-time on an annual rate of pay of £14,028;

(i) from 18 September until 24 November 1995 you worked full-time on an annual rate of pay of £14,028;

(j) on 4 July 1996 the XPA wrote to you requesting £1,436.44 repayment of pension; and

(k) on 26 September 1996 you appealed to the Secretary of State against the XPA’s decision.

These facts have been agreed by both parties.

5. You contend that you were aware that as a re-employed pensioner you could not earn more that your finishing salary and your pension in your new job. While in your new job, you were given the opportunity to work overtime. You state that at this point the XPA advised you that your pension would only be reduced if your salary exceeded the earnings limit on an annual basis.

6. The XPA contends that the regulations require reassessment of your pension at every change to your contractual hours.

7. All the representations and evidence submitted have been 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 XPA. 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 re-employed pensioner with XXX reduction of retirement pension on re-employment of pensioners was covered by regulation E15 of the 1986 regulations. As far as is material the regulation states as follows:-

“E15-(1) ... this regulation applies to a person who, since becoming entitled to a retirement pension in relation to a former employment, has entered a new employment with any scheduled body ...

(2) In paragraph (3)

Ais the annual rate of remuneration of the former employment,

B is the amount (if any) by which, immediately before the first day of the new employment, A would have been increased if it had been the rate of an official pension, within the meaning of the Pensions (Increase) Act 1971, beginning on and payable from the day after the last day of the former employment,

C is the annual rate of remuneration of the new employment,

D is the reduced rate of the retirement pension, and

E ...

(3) ... while the person holds the new employment the annual rate of the retirement pension is reduced-

(a) if C equals or exceeds (A+B) to zero, and

(b) in any other case, by the amount (if any) which is necessary to secure that (C+D ... ) does not exceed (A+B) .

(4) to (7) ...

(8) For the purposes of this regulation the annual rate of remuneration of the new employment is ... to be ascertained in accordance with the Table below.

TABLE

Nature of remuneration

Annual rate of remuneration

Fixed-rate emoluments

Rate on first day of employment

...

(9) ...

(10) If -

(a) the person’s contractual hours in a part-time new employment are altered, or

(b) he is transferred to another post under the same employing body at an altered remuneration,

this regulation applies as if he had again entered a new employment.

(11) ...

(11A) It is the duty of a person who has become entitled to a retirement pension -

(a) to inform any scheduled body with whom he proposes to accept a new employment that he is so entitled, and

(b) on entering a new employment, forthwith to notify in writing the body from whom he has become entitled to receive the pension that he has entered that employment.”

9. The 1986 regulations describes the annual rate of remuneration in the new employment as the “rate on the first day ... ” not, as you argue, the total amount earned in the year. It is not disputed that when you first entered re-employment with XXX your rate of remuneration was not such as to trigger the abatement provision in regulation E15. The question is, therefore, whether when you subsequently changed your hours of work, these periods constituted new periods of re-employment. If they did, the rate of remuneration at the start of each period would be the one to be taken into account.

10. The 1986 regulations require that, for a part-timer worker, a “contractual hours” alteration constitutes a new employment. The question is, therefore, whether your changes were contractual. The Secretary of State takes the view that this is primarily a matter between the employer and the employee. He notes that in your case XXX in their letter of 26 February 1996 to XPA states that, notwithstanding that the hours you actually worked have on occasion been higher, your contractual hours throughout had remained at 18.5 per week. He also notes the comments in their letter of 22 November 1996 that your contractual hours at that time remained the same.

11. In the circumstances he concludes that there has been no “contractual” increase in your hours and the period of 24 October 1994 to 24 November 1995 should be treated as a single period of re-employment, with the annual rate of remuneration being the rate on your first day, 4 May 1993. Thus your pension should not be abated as this rate together with your pension is lower than your former earnings.

12. The Secretary of State therefore determines that your pension does not fall to be reduced since your annual rate of remuneration on the first day of employment with XXX and your indexed pension did not exceed the indexed annual rate of remuneration of your former employment. He therefore allows your appeal.

13. A copy of this letter has been sent to the XPA.

14. 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.