Local Government Pension Scheme Appeal Determination By The Secretary of State

320 INDEX

Our Ref: LGR 79/1/1676

Date: 17 April 1998

SUPERANNUATION ACT 1972

THE 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 on behalf of Mr XXX under regulation J5 of the 1995 regulations against the decision of the Borough of XXX ("the council") to reduce Mr XXX’s retiring allowance on attaining state pensionable age of 65 years.

2. The appeal has been conducted by correspondence. Consideration has been given to your letters of 23 January and 11 August 1997; to the council's letters of 2 April and 24 July 1997; and to all copy documents submitted therewith.

3. The question for determination is whether Mr XXX’s retirement pension should have been reduced on attaining state pensionable age of 65 years.

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

(a) Mr XXX’s date of birth is 21 January 1932;

(b) he was employed by the council;

(d) on 7 June 1991, he ceased his employment with the council;

(e) with effect from 21 January 1997, at age 65, Mr XXX’s pension was reduced;

(f) on 23 January 1997, you appealed on his behalf to the Secretary of State against the council’s decision..

5. The council states that when Mr XXX reached state retirement age (age 65) his pension became subject to a flat rate modification for National Insurance purposes of £1.70 per year from 1 April 1974 to 31 March 1980. This resulted in a deduction of £10.20 from Mr XXX’s pension and the pensions increase payable to him was recalculated. The council further states that the notification of benefits which was sent to Mr XXX on 13 June 1991 clearly showed that such a modification would apply.

6. The Secretary of State has considered all the representations and evidence. He is required to determine the same question as to Mr XXX’s 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.

7.As a manual worker, Mr XXX became entitled to join the local government pension scheme by virtue of the Local Government Superannuation (Miscellaneous Provisions) Regulations 1973 which introduced the compulsory superannuation of whole-time manual workers. From 1 April 1974 these regulations were incorporated in the Local Government Superannuation Regulations 1974 which were subsequently revoked by the 1986 regulations and from 2 May 1995 became the 1995 regulations. The 1974 regulations provided for the modification or reduction of pension benefits payable to pensionable employees who were subject to the provisions of the National Insurance Acts, in recognition of their entitlement under the Acts to either a “flat-rate pension”or a “graduated pension”. Regulation F7 of the 1974 Regulations defined such a reduction of pension as follows;

F7.-(1) A retirement pension shall, subject to the provisions of this regulation, be reduced in respect of any service after 31st August 1947 in relation to which reduced contributions were paid pursuant to any enactment.

(1A)...(1B)...

(2) In respect of a person who was not immediately before the appointed day a person entitled to the optant’s rate for the purposes of the Modification regulations, the reduction shall be £1.70 in respect of each completed year of service as described in paragraph (1).

(2A) ...provided that service on or after 1st April 1980 was not to be taken into account in calculating the basic reduction under that paragraph.

(3)...to (6)...(7) Reduction shall take effect on the date on which a retirement pension becomes payable unless the person has not then reached pensionable age within the meaning of the Insurance Act; and in that case the reduction shall take effect on the date on which he reaches that age.

8. This requirement was carried into the 1995 regulations by Regulation H2 which reads as follows;

H2. Where, but for the revocation of the 1974 regulations, the amount of a benefit would have fallen to be reduced under Part F of those regulations, the amount shall be reduced as if that Part had not been revoked.

9. It is accepted that Mr XXX was a person to whom the National Insurance Acts applied when he joined local government employment. Part F of the 1974 regulations was introduced to simplify the modification provisions in place at that time (under the National Insurance Acts) and recognised that during the course of employment an employee could fall into different cases in respect of different periods of employment. It is not clear from the information available which category of employee Mr XXX was but it is clear from the notification issued to him by the ** Borough of XXX on 6 March 1974 that as he is a person who was subject to the provisions of the Insurance Acts legislation the council had no option but to apply the reduction required when he reached normal retirement age. This reduction is a once only payment. The conclusion has therefore been reached that, as a person who was subject to the provisions of the local Government Pension Scheme Regulations from 1974 to 1995 and also to the Insurance Acts, 1959 to 1965, Mr XXX was entitled to a pension based on 17 years and 341 days reckonable service, such pension was inflation proofed, but was also subject to the National Insurance modification.

10. The Secretary of State concludes the council were right to reduce Mr XXX’s retirement pension when he reached 65 years of age but that no further reductions should be applied.

11. The Secretary of State determines as set out above and dismisses the appeal.

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

13. 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, members of the department may not discuss or comment on the case, either in writing or over the telephone.