405 INDEX
LOCAL GOVERNMENT PENSION APPEAL
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (“the 1995 regulations”)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (“the 1997 regulations”)
1. I refer to your letter of 27 April 1998 in which you appeal (under regulation 102 of the 1997 regulations) to the Secretary of State for the Environment, Transport and the Regions against part of the decision made by XXX, the Appointed Person.
2. The Appointed Person determined that the date of payment to which interest was to be calculated should be the date that XXX County Council (“the council”) dispatched the payment to you; and that the commencement date for averaging your electoral fee payments was a matter for XXX District Council to decide and he could not uphold your contention that it should be 14 July 1994.
3. The Secretary of State’s powers under regulations 102 and 103 of the 1997 regulations are limited to reconsidering the original disagreement referred to the Appointed Person under regulation 100. This regulation refers to a matter relating to the Local Government Pension Scheme (LGPS) which effectively means whether or not the LGPS regulations have been correctly applied in the circumstances. Like the appointed person the Secretary of State has no powers to direct a local authority to act outside the provisions of the regulations. Therefore the questions for determination by the Secretary of State are as follows:
a) from what date should the annual average of fees as part of your pensionable remuneration be calculated; and
b) what is the date of payment up to which interest should be paid on the late payment of benefits.
4. The Secretary of State has considered all the representations and evidence. Copies of all documents supplied by the appointed person have been sent to you under cover of the department’s letter of 7 May 1998.
5. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that
a) the annual average of fees should be calculated from 1 January 1994; and
b) that the regulations do not require payment of interest on late payment of benefits beyond the date payment was dispatched to you.
This decision confirms that made by the Appointed Person. 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 this determination. 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 to the High Court. Because of this officials may not discuss the case further.
6. This completes the second stage of the internal disputes resolution procedure. 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).
7. The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the LGPS made or referred in accordance with the Pension Schemes Act 1993. 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 the Appointed Person: letter dated 6 May 1998 (with enclosures);
b) from you: letters dated 27 April and 18 May 1998 (with enclosures); and
c) from the council: letter dated 24 July 1998 (with enclosures: letter from XXX dated 23 July 1998 and copy of your job description dated January 1994 (copies enclosed)).
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
a) you worked as an administrator for XXX;
b) you prepared a draft job description for your post in January 1994;
c) your agreed job description, which referred to electoral duties, was signed by you and the Chief Executive on 13 and 14 July 1994;
d) on 17 November 1995 you retired from employment with XXX; and
e) in his letter dated 25 October 1997 the Secretary of State allowed your appeal that fees you received for electoral duties constituted pensionable remuneration.
3. The Appointed Person found that the commencement date for your pensionable income including electoral fees was a matter for your employer to decide and that it was a question of fact. If necessary you would have carried out electoral duties at least from January 1994 when you included them in your draft job description, and the later date (14 July 1994) that this was agreed by the Chief Executive did not change the facts. He found that the interest on late payment should be calculated to the date on which the payment was, in your case, dispatched by post. He considered it would be impracticable to use any other date.
4. You contend that calculating the average of fees should run from the date your job description was agreed, i.e. 14 July 1994, and that the interest should have been calculated up to the date payment was cleared to your account.
5. When you retired your benefits were awarded under the 1995 regulations. Regulation D1(2)(a) and Schedule D1 paragraph 9 provide for the calculation of fees as pensionable remuneration. These provisions require fees to be calculated as an annual average over a certain period of time. Normally this is the last three years, but it may be up to five if that is more beneficial and the employer allows it, or it will be less where the member is entitled to receive fees for a shorter period.
6. In your case it is not disputed that you should be treated as if you were entitled to receive fees over only part of your last three years, and thus the annual average should be calculated over that part. On advice from XXX, the council used a period starting on 1 January 1994, whereas you contend it should start on 14 July 1994. The Secretary of State accepts that your job description was not jointly signed until 14 July 1994. In his view, entitlement to fees does not depend upon the date a job description is signed, but upon whether in practice the member is required contractually to carry out the tasks when necessary for which fees would be paid. It is possible, even if bad management practice, for a job description to be drawn up retrospectively; equally it may be amended to reflect changes that have in reality already happened. It is therefore more relevant to consider the period covered by the duties in the job description rather than the date the description is formally signed. In your case the Secretary of State notes that your appraisal interview report of 7 July 1994 stated that the job description, which is of recent vintage, accurately reflects responsibilities. The Secretary of State is satisfied that those responsibilities were ones that existed within the period reviewed in the appraisal, ie a period before the job description was formally signed on 14 July 1994.
7. It is not clear to the Secretary of State, however, when before 14 July 1994 you assumed responsibility for electoral duties for which fees were to be paid. XXX maintain that you may have received payment for electoral duties for most, if not all, of your period of employment with them. You say that the job description was the first one for the position you held following internal promotion some time earlier though you do not say when this was. In the absence of clearer evidence the Secretary of State has confined his attention to the dates under dispute, 1 January and 14 July 1994. It is clear that the draft job description you drew up in January 1994 was not materially different as concerned electoral duties from that signed in July 1994. The Secretary of State takes this to indicate that you had assumed such responsibilities, even if not called upon to execute them, at that stage. He considers that this makes you entitled to receive fees at that time. XXX, exercising the decision required of them under regulation J2(1), decided that 1 January should be taken as the commencement date for the entitlement. While you have questioned this, the Secretary of State does not consider you have produced conclusive evidence to disprove it. The fact that it was a Bank Holiday is not in his view material as your employment with XXX continued across that date. He therefore accepts the council=s view as based on XXX=s decision and dismisses this part of your appeal.
8. The Secretary of State has next considered the question of the date to which payment of interest should be made. Regulation H1(1) provides for interest to be paid on certain benefits that were not paid when due ...calculated at one per cent above base rate on a day to day basis from the due date to the date of payment.... The regulations do not define the term date of payment. You contend it should be the date the funds are cleared. The appointed person determined that it should be the date the payment was despatched. The Secretary of State notes that the council produced a cheque on 15 January 1998 including interest calculated up to 19 January 1998.
9. The Secretary of State is unaware of any case law that would help clarify this point. He recognises that calculating interest only up to the date of despatch would result in a potential loss of interest during postage and clearance before the funds are credited to your account and he has some sympathy for your view that the date of payment should be the date funds are cleared and you can access them. That is, he understands, the date the funds are transferred in the bank. However, he also understands that, when a payment is cleared, banks may compute interest from an earlier date, for example, two days after presentation. There is some argument in equity therefore that the council should pay interest until then, to avoid any loss of interest while preventing double interest accruing. There are however difficulties with selecting such a date which postdates the date of dispatch. Times in transit, presentation and clearance, and banking practice may vary. On this the Secretary of State agrees with the appointed person. While some of these matters are outside your control they are also outside the council=s. It would not therefore be possible to forecast with certainty what date to pick. Furthermore, as the bank rate may vary in the interim it would not be possible to compute interest in advance that would necessarily comply with the terms of the regulations.
10. The Secretary of State considers that the council have a duty to ensure that payments are made with due diligence and promptness so as to avoid financial disadvantage to the member while safeguarding the interests of the taxpayer. He notes that the problem arises in this instance because payment was made by cheque; payment by direct transfer would have avoided the difficulty. In his view such a payment might therefore have been preferable on this score. However, he also notes that the council have made some allowance for this by calculating interest for a few days beyond the date of postage. In terms of the strict requirements of the regulations, he concludes that when paying by cheque interest must be calculated up to and including the date the payment is sent off, that is the date the cheque is despatched, but there is nothing to require interest to be paid beyond then, though it may be reasonable for the council to do so. He therefore concludes that the council have acted in accordance with the requirements of the regulations and he dismisses this part of the appeal.