Our Ref: LGR85/18/30 324 INDEX
April 1998
LOCAL GOVERNMENT PENSION APPEAL
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1974 (“the 1974 regulations”)
LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (“the 1986 regulations”)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (“the 1995 regulations”)
1. I refer to your letter of 10 February 1997, on behalf of Mr XXX, in which you appeal (under regulation J8 of the 1995 regulations) to the Secretary of State for the Environment, Transport and the Regions against the decision of Mr XXX, the Appointed Person. You had asked the Appointed Person to consider two disagreements concerning Mr XXX’s local government pension. The first disagreement concerned whether interest should have been paid on the adjustments made to correct underpayments made to Mr XXX’s pension over a number of years from 1978 to 1987 resulting from an error in calculating service length. The Appointed Person upheld the council’s decision not to pay interest as at the time the error was corrected, in 1987, there were no provisions in the scheme rules regarding the payment of interest. The second disagreement concerned the pensionable remuneration figure used in the calculation of benefits. The Appointed Person determined that it would not be reasonable to exercise his discretion to extend the six month period (the period allowed for a disagreement to be referred to the Appointed Person) specified under regulation J6(7) of the 1995 regulations. He concluded from the information he had obtained from XXX and XXX that due to the age of the records involved, it was not possible to review this particular issue with any degree of certainty.
2. The questions for determination by the Secretary of State are whether:
a. interest should have been paid in 1987 on the arrears of payments to Mr XXX’s benefits which were made to correct underpayments over a number of years from 1978 to 1987 resulting from an error in calculating his service length; and
b. the pensionable remuneration figure used in the calculation of Mr XXX’s benefits was correct.
3. The Secretary of State has considered all the representations and evidence. Copies of all the evidence supplied by the Appointed Person have been sent to you under cover of the Department’s letter of 9 March 1998. Further evidence was sought from XXX, Pensions Liaison Officer for XXX Council, and a copy of his letter dated 15 April 1998 is enclosed.
4. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that:
a. with regard to question 2a. no interest is payable. His decision confirms that of the Appointed Person.
b. with regard to question 2b., for the purposes of the 1974 regulations, Mr XXX’s pensionable remuneration is £11,944.44 and his pension benefits should be recalculated using this figure. This decision replaces the Appointed Person’s decision of 8 October 1997.
5. In making his decision the Secretary of State is acting judicially and has no power to modify the application of the regulations to the facts of the case. He has no power to alter it unless instructed to in a judgement by the High Court. Because of this officials may not discuss the case further.
6.The Occupational Pensions Advisory Service (OPAS) is available to assist members and beneficiaries in connection with difficulties which they have failed to resolve. His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 233 8080).
7. 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).
EVIDENCE RECEIVED
1. The following evidence has been received and taken into account:
a. from Mrs XXX, on behalf of Mr XXX: letter dated 10 February 1998 and enclosures; and
b. from the Appointed Person: letter dated 3 March 1998 and enclosures (listed in the Department’s letter of 9 March 1998); and
c. from XXX, Pensions Liaison Officer for XXX Council (the council): letter dated 15 April 1998.
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
a. Mr XXX retired from the council on 2 June 1978;
b. the pensionable remuneration used to calculate his lump sum payment and annual pension was £11,610.35;
c. in 1987 XXX Council found that as a result of an error in the calculation of Mr XXX’s reckonable service his lump sum payment and annual pension had been incorrectly paid due to an error in calculating service length;
d. this resulted in an underpayment of lump sum and annual pension; and
e. payment of the arrears was made to Mr XXX in 1987.
3. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. The Secretary of State notes that the parties agree that in 1978 an error was made in the calculation of Mr XXX’s reckonable service which resulted in incorrect pension benefits being made. This error was corrected in 1987. At the time the arrears of payment were made to Mr XXX there were no provisions in the 1986 regulations for interest to be paid on the late payment of pension benefits. The 1986 regulations were amended with effect from 1 April 1989 by the Local Government (Superannuation and Compensation) (Amendment) Regulations 1989 to provide for the payment of interest where certain benefit payments were made late; however, this provision did not apply retrospectively and so does not apply in this case. The Secretary of State has no powers to direct local authorities to make or offer payment of indexation or compensation.
4. With regard to the question whether the correct pensionable remuneration was used in 1978 to calculate Mr XXX’s pension benefits, the Secretary of State notes that due to the age of the records involved the council have been unable to ascertain how the pensionable remuneration figure of £11,610.35 was arrived at. Mr XXX’s salary record cards show an annual salary of £11,418.00 at 1 April 1977 with a 5% pay increase payable from 1 July 1977. The council have assumed that the figure used at the date of retirement of £11,610.35 was correct. However, they have recalculated the salary on the basis of the record card details and arrived at an amended figure of £11,944.44; although they cannot confirm that this is correct, they have indicated that they would be prepared to accept it as such.
5. The Secretary of State notes that the council is unable to provide unequivocal evidence to show which figure is correct. He considers that the information provided by the council tends to indicate that there is some evidence from the record cards to support a final pensionable remuneration figure of £11,944.44. The Secretary of State takes the view that, as the council has been unable to prove that the pensionable remuneration figure of £11,610.35 is correct and that there is some evidence that this figure does not fully reflect the 1977 pay increase, Mr XXX’s pensionable remuneration at 2 June 1978 should be taken as £11,944.44 for the purposes of the 1974 regulations. The Secretary of State concludes therefore that Mr XXX’s pensionable remuneration to be used for the purposes of the 1974 regulations in calculating his benefits is £11,944.44. In this case interest will be payable on the payment of arrears under the 1995 regulations (regulation H1).