Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR85/18/50

July 1998

LOCAL GOVERNMENT PENSION APPEAL

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (“the 1995 regulations”)

1. I refer to your letter of 31 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 for the XXX concerning the disagreement referred by Mr XXX, on behalf of Mrs XXX, about the death grant in respect of Mr XXX. The Appointed Person determined that the death grant in respect of Mr XXX should be calculated under Regulation E1(2) and not by reference to Part III of Schedule D5 as referred to in Regulation E6.

2. The question for determination by the Secretary of State is whether Mr XXX’s death grant should be calculated under Regulation E1(2) or Part III of Schedule D5 as referred to in Regulation E6.

3. The Secretary of State has considered all the representations and evidence. Copies of all the documents supplied by the Appointed Person have been sent to you under cover of the Department’s letter of 29 April 1998.

4. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that Mr XXX’s death grant should be calculated under paragraph 18(2) of Part III of Schedule D5 as referred to in Regulation E6 and paragraph 19 of Part IV of Schedule D5. His 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 27 February 1998. He is acting judicially and has no power to modify the application of the regulations to the facts of the case. Having made his determination he has no power to alter it but you may refer the matter to the Pensions Ombudsman or the High Court. Because of this, officials may not discuss the case further.

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

6. 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 XXX Council (the council) letter dated 31 March 1998; with enclosures; and

b. from the Appointed Person letter dated 28 April 1998; with enclosures (listed in the Department’s letter of 29 April 1998).

REGULATIONS CONSIDERED AND REASONS FOR DECISION

2. From the evidence submitted the following relevant points have been noted:

a. Mr XXX was employed by XXX Council until his employment ceased in 1995, and was a member of the local government pension scheme (LGPS) (it is noted that in a letter from XXX Council dated 2 October 1995 they state he left the LGPS on 25 August 1995, but the council’s Statutory Notification shows him as being a member until 5 September 1995);

b. on 6 September 1995 he commenced employment with the council and became a member of the LGPS;

c. he elected to keep his benefits in the LGPS with the council separate to those with XXX Council;

d. he died whilst in the service of the council; and

e. a death grant became payable.

3. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. At the time Mr XXX died the 1995 regulations applied. These regulations provide that where a member dies in service a death grant is payable under regulation E1 and where a member has ceased local government employment and is entitled to preserved benefits a death grant is payable under regulation E2. However, where a member dies in further local government employment who has preserved benefits regard must be had of regulation E6 which requires consideration to be given to Part IV of Schedule D5.

4. The Secretary of State notes your contentions that in calculating a death grant following death in further employment regard must be had to paragraph 19 of Schedule 5. You contend that paragraph 19(2) requires the member to be treated “as if immediately before his death he had become entitled to benefits”. You consider that this means that regulation E1(2) does not apply and E3(2) does. As a consequence paragraph 18(1) of Schedule D5 E3(2) also applies “subject to sub-paragraph (2)”.

5. MrXXX had referred a disagreement she had with the council to the Appointed Person. She asked him to consider why the death grant assessed by the council would not be in line with the Annual Benefit statement. This stated that the value of death benefits would be approximately £48,793.02. Following Mr XXX’s death the council calculated the death grant as £11,547.48. The Appointed Person in considering the disagreement did not appear to consider Part IV of Schedule D5 but whether Part III of Schedule 5 applied in Mr XXX’s case. He concluded that he did not satisfy one of the criterion - that is that the person “has ceased to hold the further employment and has become entitled in relation to it to a retirement pension”. He determined the death grant in respect of Mr XXX fell to be calculated under Regulation E1(2) and not by reference to Part III of Schedule D5 as referred to in Regulation E6. His reasons for reaching this decision were that Mr XXX had not “ceased to hold the further employment” with the council in the normal sense (through resignation, retirement, etc) and he had (through his death in the course of the employment) failed to become entitled to a retirement pension in relation to the further employment. For these reasons he considered that paragraph 18(1) of Part III did not apply and therefore paragraph 18(2) could not apply.

6. The Secretary of State has therefore considered whether Part IV of Schedule D5 applies, as required by regulation E6, in Mr XXX’s case. The test to be applied is whether he (i) was entitled to a retirement pension (other than one which was reduced under regulation D13), (ii) after becoming so entitled entered further local government employment, (iii) died whilst in this employment and (iv) if he had then ceased to be employed (otherwise than by reason of his death) he would have been entitled to give a notice under Part II of Schedule D5 (that is combine his benefits). When Mr XXX ceased employment with XXX Borough Council he elected to keep his LGPS benefits with them separate to those with the council. Under Regulation D11 where a member ceases to hold employment and is not entitled to immediate payment of those benefits and has a statutory pension entitlement he becomes entitled to a retirement pension and grant payable from the appropriate date (referred to as “preserved benefits”). The Secretary of State takes the view that Mr XXX had became entitled to a retirement pension from XXX Council, died in the further employment (that is he died whilst employed by the council), and would, if he had not died, have been entitled to give notice to combine his benefits (that is he would be able to combine both his LGPS benefits). The Secretary of State takes the view therefore that Part IV of Schedule D5 does apply. Because it applies Mr XXX is treated as if he had become entitled to his benefits immediately before his death either under Part II or Part III of Schedule D5 (paragraph 19(2) of Schedule D5). This depends on which one is more favourable to the person to receive the benefits, in this case MrXXX.

7. The Secretary of State notes that no dispute has been raised with him about whether MrXXX’s benefits should be combined under Part II of Schedule D5. He has therefore had regard to Part III of Schedule D5. The Secretary of State takes the view that for the reasons stated above the Appointed Person was wrong to determine that Mr XXX had not ceased to hold the further employment (that is with the council) in the normal sense (through resignation, retirement, etc) and that he had (through his death in the course of the employment) failed to become entitled to a retirement pension in relation to the further employment. He concludes that Mr XXX’s death grant falls to be calculated under paragraph 18(2) of Schedule D5.