Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR 79/1/1666 481 INDEX

Date : December 1998

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1974 (“the 1974 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 the XXX administered by XXX Metropolitan Borough Council (“the council”) on your local government pension scheme (“the LGPS”) service.

2. The appeal has been conducted by correspondence. Consideration has been given to your letters of 31 October 1996, 14 January, 3 February and 22 July 1997 and 17 July 1998; the council’s letters of 20 March and 23 July 1997 and 13 July 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 you are entitled to count a period of membership prior to 12th July 1974 for which a return of contributions was made.

4. The Secretary of State dismisses the appeal. The following paragraphs explain why.

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

(a) from 28 March 1968 until 12th July 1974 you were employed by the University of XXX (“XXX”)

(b) on 12 July 1974 you gave notice in writing accepting a refund of your pension contributions when you left employment with XXX;

(d) you appealed to the Secretary of State against the council’s decision not to permit you to pay back the refunded contributions.

These facts have been agreed by both parties.

6. You maintain that as both XXX and XXX are Local Government employers, your move to XXX could have been treated as a transfer for which a transfer value could have been accepted by your new employer. You contend that the council should not have authorised a refund of contributions. You contend that the form you completed withdrawing your contributions to the pension fund was ambiguous, misleading and did not constitute an election because: it did not meet the requirements of regulation C8(1)(a) or C8(2)(b) which required an election when you ceased employment as you contend you were still employed by XXX at the time; and it contained a statement as to a wish and did not state election. You state that the implication of the form is that as you were reemployed in local government within 12 months of leaving you are entitled to count your service with XXX and the council are preventing this.

7. The council contend that you are not entitled under the 1995 regulations to repay your refunded contributions. The option form you completed to withdraw your contributions gave you the option to leave your contributions in the pension fund as you had more than 5 years service and the option to transfer your benefits. Therefore, you cannot reckon service prior to 15th July 1974.

8. 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 council. He is acting judicially and has no power to modify the application of the regulations to the facts of the case.

9. On 1 April 1974 before you ceased employment with XXX the 1974 regulations came into operation. They are quoted below as far as is relevant to your appeal. Regulation C8 of the 1974 regulations provided for a return of an employee’s contributions in the following circumstances:

“C8.-(1) This regulation shall apply to a pensionable employee of an employing authority -

(a) who before becoming entitled to any benefit under these regulations ceases to be employed by that authority; and

(b) whose remuneration on which contributions were paid ... has not at any time exceeded the annual rate of £5,000.

(2) A person to whom this regulation applies who -

(a) is entitled to reckon an aggregate of less than 5 years’ reckonable service; or

(b) is entitled to reckon an aggregate of not less than 5 years’ reckonable service and qualifying service and elects that this paragraph shall apply in his case by notice in writing given to the appropriate administering authority within 12 months after the date on which he ceases to be employed as mentioned in paragraph (1)(a),

Shall be entitled to -

(i) ...

(ii) if he so ceases to be employed for reason of his voluntary resignation ... to receive ... a sum equal to the aggregate amount of his contributions to the fund.

(3) ...

(4) Notwithstanding anything in the foregoing provisions of this regulation, no payment shall be made thereunder to a person who, having ceased to be employed by the employing authority in the circumstances mentioned in regulation E2(1)(c) and before giving notice under paragraph 2(b), again becomes a pensionable employee and gives notice under regulation E2(4)(e).”

Regulation E2(1)(c) gave an entitlement to deferred benefits with the following proviso:

“E2(1)(c) ... either the reckonable service and qualifying service he is entitled to reckon amounts in aggregate to not less than 5 years or he is not a person who is entitled on so ceasing to a return to contributions under regulation C8.”

Release of these deferred benefits was subject to regulation E2(4) which stated the following:

“(4) A pensionable employee who ceases to be employed in the circumstances mentioned in paragraph (1)(c) shall not on that account be entitled to receive payment of or payments in respect of a benefit under this regulation -

(a) to (d) ...

(e) if, after so ceasing to be employed but before becoming entitled to receive payment of or payments in respect of a benefit under paragraph (1)(c), he becomes a pensionable employee and does not within 3 months of after so becoming a pensionable employee, or such longer period as the appropriate administering authority ... may in a particular case allow, give to the authority maintaining the fund relating to the latter employment notice in writing that he wishes to retain the rights to benefits under these regulations to which he had under paragraph (1)(c) already become entitled.”

Lastly, the part of the 1995 regulations that are relevant state as follows:

“C21A.-(1) This regulation applies where-

(a) a member who ceased to be employed in a local government employment (“the previous employment”) on or after 1st April 1974 and before 1st January 1980 subsequently becomes employed in another local government employment;

(b) on the cessation of the previous employment his total period of membership ... amounted to less than 5 years; and

(c) a return of contributions was made in relation to the previous employment by the administering authority of the pension fund to which he was a contributor (“the previous fund authority”)

(2) Where this regulation applies then ... the member shall be entitled to count as a period of membership any period in respect of which the return of contributions referred to in paragraph (1)(c) has been received if the member makes payment as required by paragraph (3).”

10. It is not disputed that you were a contributory employee under the LGSS while employed by XXX. The council have shown that after you ceased employment with XXX you completed a form to avail yourself of a refund of contributions as provided for by regulation C8(2)(b) of the 1974 regulations. The Secretary of State takes the view that this constituted a written notice of election as required by the regulations and that it was your intention to obtain a return of your contributions. The Secretary of State does not consider the option form you signed to be misleading. He considers that the fact that the written notice was sent to you before you ceased employment did not mean that it was an election to have effect after you ceased employment.

11. The Secretary of State takes the view that unlike a member who had less than 5 years service, as your service was greater then 5 years under regulation C8(2)(b) of the 1974 regulations you could elect to receive a refund of contributions. The alternative would have been to preserve your pension rights for service prior to 12th July 1974 or delay your decision and seek to transfer your contributions to XXX. Instead you elected to receive a refund of contributions. You have not argued that you elected to preserve your rights. As you gave notice under regulation C8(2)(b) you were not entitled to give notice under regulation E2(4)(e) to retain your pension rights for your service with XXX after you commenced employment with XXX.

12. Finally, the Secretary of State has considered the question whether you be allowed to repay the refund under regulation C21A of the 1995 regulations. He notes that you do not dispute that, because regulation C21A of the 1995 applies only where service in previous employment amounted to less than 5 years, it does not apply to you, but you have suggested it is inequitable. You have also contended at one point that the council made the offer of accepting such repayments, and they should stand by this and should not have withdrawn it. The Secretary of State cannot determine this issue in your favour; his decision has to reflect the regulations as they stand, and regulation C21A does not apply so as to allow you to repay your refunded contributions.

13. The Secretary of State determines that you are not entitled to count a period of membership prior to 12th July 1974 for which a return of contributions has been made. He therefore dismisses your appeal.

14. Having made his determination he has no power to alter it but you may refer the matter to the Pensions Ombudsman or to the High Court. Because of this officials may not discuss the case further.

15. The Pensions Advisory Service (OPAS) is available to assist members and beneficiaries in connection with difficulties which they have failed to resolve. The OPAS address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 233 8080).

16. The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the local government pension scheme. His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 834 9144).

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