338 INDEX Our Ref: LGR85/18/39
May 1998
LOCAL GOVERNMENT PENSION APPEAL
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT SUPERANNUATION REGULATIONS SCHEME 1986
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995
1. I refer to your letter of 11 March 1998 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. The Appointed Person determined “that when you retire it will be possible to do a comparison between the benefits afforded under the 1995 Regulations and those that would have been payable had those Regulations not come into force and the terms of the 1986 Regulation still apply”. He considered that this would mean that any membership in the local government pension scheme you have accrued at or above 30 hours a week will be treated as full-time. He further considered that if you increased your hours to full-time prior to retirement then when the benefits are paid the full-time remuneration will be used.
2. You ask the Secretary of State to consider a number of points. The Secretary of State’s power under regulations J7 and J8 of the 1995 regulations is limited to reconsidering a disagreement about a matter in relation to the local government pension scheme, which effectively means whether or the regulations have been correctly applied in the given circumstances. It is noted that you do not disagree with the Appointed Person’s decision but ask the Secretary of State to confirm that the Appointed Person’s decision is correct. It is for the Appointed Person, taking whatever advice he considers necessary, to reach a decision and determine accordingly. The Secretary of State would not normally reconsider a matter where the Appointed Person’s decision is not disputed: however, in this case he considers that for the avoidance of any doubt he will reconsider the original disagreement.
3. The questions for determination by the Secretary of State are whether:-
a. following the changes introduced with effect from 2 May 1995 by the 1995 regulations to the definition of whole-time, your membership counts as whole-time or part-time for calculating benefits; and
b. the administering fund is responsible for keeping a record of information concerning your benefits.
4. The Secretary of State has considered all the representations and evidence. Copies of all the documents supplied by the Appointed Person had been sent to you.
5. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that for the purposes of the 1995 regulations:
a. your period of membership in the local government pension scheme (LGPS) from 2 May 1995 counts as part-time, however for any benefits calculated in relation to your subsequent part-time service up to 1 April 1997 when the 1997 regulations came into force, you are treated as if you had been in continuous whole-time membership; and
b. the administering fund is required to keep a record of certain information including whether you are part-time or whole-time. They also have a responsibility for deciding the amount of any benefit. The administering fund must ensure that proper records are kept so as to ensure that the correct benefits are paid whether this is a transfer value or to calculate the pension.
The Secretary of State’s reasons and the regulations which he considers apply in your case are set out in the annex to this letter, which forms an integral part of the determination. His decision replaces the Appointed Person’s decision of 28 November 1997. 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 Secretary of State has also had regard to the 1997 regulations. Under the Local Government Pension Scheme (Transitional Provisions) Regulations 1997 the employing authority are required to augment members’ membership, where their rights under the 1997 regulations are less valuable than under the 1995 regulations. The Secretary of State considers that your employing authority, if they have not already done so, will need to take this into account and if necessary take appropriate action.
7. This completes the second stage of the internal disputes resolution procedure. If you believe there is any question of maladministration you may wish to ask the Pensions Ombudsman whether there is any question for him to consider. His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 834 9144).
8.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).
9. The Pensions Ombudsman may also investigate and determine any complaint or dispute of fact or law in relation to the local government pension scheme.
10. A copy of this letter has been sent to the Appointed Person and the Pension Manager who has been asked to send a copy to your employing authority.
EVIDENCE RECEIVED
1. The following evidence has been received and taken into account:
a. from Mr XXX: letters dated 11 March (with enclosures) and 3 April 1998; and
b. from Mr XXX on behalf of the Appointed Person: letter dated 25 March 1998 with enclosures (listed in the Department’s letter of 26 March 1998).
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
a. on the 1 April 1995 the council granted you a temporary variation to contracted hours: you reduced your weekly hours of employment with the council from 37.5 to 30 hours;
b. under the 1986 regulations anyone working 30 hours or more per week is treated as whole-time;
c. the 1995 regulations came into force on 2 May 1995 and the definition of whole-time changed;
d. your membership certificate, dated 29 May 1995 showed your employment as 100%: that is you were whole-time; and
e. in December 1996 you received your Benefits Statement for the financial year ending 31 March 1996 and discovered that your service from 2 May 1995 would be calculated pro rata, although in calculating any benefit the relevant pensionable remuneration would be the whole-time equivalent.
3. The Secretary of State in reaching his decision has had regard to the regulations, which in his view, apply. In early 1995 you asked XXX Fund (the fund) whether reducing your hours of employment to 30 hours from 37.5 per week for a period of between 5 to 10 years and then increasing your hours to 37.5 per week would affect your pension benefits. You claim you were told that if you worked 30 hours per week or more you would be classed as full-time. On 1 April 1995 you reduced your hours to 30 per week. You noted that your Membership Certificate dated 29 May 1995 where it refers to “Whole-Time/Part-time (shown as a percentage)” shows 100%. However in December 1996, when you received your Benefits Statement for the financial year ending 31 March 1996, you found that your benefits had been reduced. You noted that neither the letter nor the literature which accompanied the Benefits Statement explained that the regulations had changed or that benefits for people in your position would be reduced.
4. The fund, in their letter dated 20 December 1996 to you, explained that before 2 May 1995 where anyone worked 30 hours or more per week their benefits would be calculated using the calendar length period and actual pay. However from 2 May 1995 onwards the 1995 regulations altered the definition of service and now referred to service as a period of membership. They went on to explain that any period of membership is recorded at its proportionately reduced length if it is not whole-time employment. In calculating your benefits the notional whole-time pay figure would be used. They state that “Your part-time hours at 1 May 1995 were 30/37.5 which equates to a percentage of 80%”. The fund should have made it clear that the effect of using the whole-time equivalent pay figure means that a member does not suffer a pension reduction for this period, even if there is a reduced period of membership.
5. The Appointed Person determined that the saving provision under paragraph 10(2) of Schedule M4 of the 1995 regulations applied in your case and that when you retired it would be possible to do a comparison between the benefits afforded under the 1995 regulations and those that would have been payable had those regulations not come into force and the terms of the 1986 regulations still applied. He went on to state “This would, I think, meet the criteria that you are seeking to achieve in reckoning the period of membership that you will have accrued at or above the 30 hours a week as have a value equal to full-time. If you do increase your hours prior to retirement to again be full-time then when the benefits are paid it is the full-time remuneration that will be used”.
6. There is no dispute between the parties that when you reduced your hours of employment to 30 per week on 1 April 1995 under the 1986 regulations this was considered whole-time. Nor do you dispute the Appointed Person’s determination but rather seek confirmation that his decision is correct. The Secretary of State has therefore considered the conclusion the Appointed Person came to. Paragraph 10(2) of Schedule M4 applies where a member’s reckonable service counted as whole-time under the 1986 regulations but after 2 May 1995, the date the 1995 regulations came into force, counts as part-time. There is no dispute that your service counted as whole-time under the 1986 regulations for the period 1 April to 1 May 1995 and by virtue of the saving provision in paragraph 7 of Schedule M4 this is treated as whole-time. From 2 May 1995 your membership counts as part-time by virtue of the changed definition of whole-time in regulation B3(3)(b). However for any benefits calculated in relation to your subsequent part-time service you are treated as if you had been in continuous whole-time membership (paragraph 10(2) of Schedule M4 which disapplies paragraph 7(b) from your subsequent part-time service). The Secretary of State therefore concludes that for the purposes of the 1995 regulations your membership counts as part-time; however for any benefits calculated in relation to your subsequent part-time service up to 1 April 1997, when the 1997 regulations came into force, you are treated as if you had been in continuous whole-time membership.
7. Neither the local authority nor the Secretary of State can anticipate what the position will be regarding either a transfer value of your pension benefits or the level of your benefits when you retire as it will depend on the regulations then in force.
8. The Secretary of State has also considered whether it is the responsibility of the administering fund to keep a record of whether you are part-time or whole-time. The administering fund is required to keep a record of each member including, amongst other information, whether a member is whole-time or part-time (regulation M5 and J2(2) of the 1995 regulations). How this information is kept is a matter for the fund. The administering fund are also responsible for deciding the amount of any benefit. The Secretary of State considers that the administering authority must ensure that proper records are kept so as to ensure that the correct benefits are paid whether this is a transfer value or to calculate the pension.