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Date: 18 November 1998 467 INDEX |
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT SUPERANNUATION SCHEME 1986 (“the 1986 regulations”)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (“the 1997 regulations”)
1. I refer to your letter of 5 May 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 the decision of XXX, the Appointed Person.
2. The Appointed Person upheld the decisions of the former XXX County Council’s (XXX) on the amount of pensionable pay on which your pension should be calculated and XXX Council (the Council) to reduce your pension on re-employment.
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. Employment issues that do not directly relate to pension regulation matters, such as whether or not a P60 has been provided, cannot be dealt with under the Internal Disputes Resolution Procedure (IDRP). Nor can the Secretary of State deal with complaints about the way an administering or employing authority have acted, since he can give no redress even where maladministration is demonstrated. There are no provisions in the LGPS regulations to award compensation where claims are made that information has not been provided with regard to the LGPS. 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
a) whether the correct pensionable remuneration was used for the calculation of your pension; and
b) whether THE COUNCIL have correctly assessed your annual rate of remuneration during your re-employment as a pensioner from 27 January 1992 to 23 July 1993, for the purposes of suspending your pension.
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 21 May 1998.
5. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that it has not been shown that your pensionable remuneration on which your pension was calculated was incorrect. He also finds that THE COUNCIL have correctly calculated your annual rate of remuneration as a re-employed pensioner. His decision confirms that made by the Appointed Person. The reasons for his decision and the regulations which apply are set out in the attached annex, which forms an integral part of his determination. He is acting judicially and has no power to modify the way the regulations apply 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 the Secretary of State’s officials cannot discuss the case further.
6. This completes the second stage of the IDRP. The 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. 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 18 May 1998 (with enclosures);
b) from you: letter dated 5 May (with enclosures) and letter received on 30 September 1998; and
c) from the council: letter dated 21 July and facsimile dated 4 September 1998 (copies enclosed).
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
a) from 23 October 1979 you were employed by XXX Council (XXX);
b) on 25 January 1991 you retired on ill-health grounds;
c) pensionable remuneration was based on a final year’s salary of £8,705.56;
d) your annual pension was £2,176.14;
e) you later were re-employed by XXX City Council (XXX) on three separate occasions;
f) from 10 June 1991 to 21 or 24 December 1991 you were a casual employee working a fixed number of hours per week;
g) from 27 January 1992 to 23 July 1993 you were a casual employee on no fixed hours at a rate of £3.7205;
h) from 1 April 1992 your annual rate of pay rose to £9,510.52 subsequently leading THE COUNCIL (who administer your pension) to suspend your pension from that date;
i) from 24 July 1993 you were a full time employee until 9 March 1997 when you retired on ill-health grounds; and
j) from 10 March 1997 THE COUNCIL suspended your pension in order to recover over payment of pension.
3. In your appeal to the Appointed Person you contended that your pension benefits were wrongly calculated. You contended that XXX/THE COUNCIL used the wrong pensionable remuneration by not taking into account extra shift allowances and miscellaneous payments. While THE COUNCIL have agreed to include the extra shift allowances and recalculate your pension you disagree with their calculations. You also complained that your pay records for the period were not retained by THE COUNCIL.
4. When you became re-employed after being awarded a pension you maintain you kept THE COUNCIL sufficiently informed of changes to your working arrangements, that you did not have set hours of work, you worked when required and that your earnings for the year from 27 January 1992 only covered 48/49 weeks. You contend that overtime earnings should not have been considered as part of your annual remuneration when the suspension of your pension was being considered since it was non-contractual and therefore excluded from the definition of remuneration in the 1986 regulations. You believe that your unemployment allowance was also included in the assessment of your earnings when suspension of your pension was considered. You were unhappy that your pension was suspended without repayment arrangements being agreed. You questioned whether the LGPS rules should have been applied to you since, as a casual employee, you could not join the scheme under the 1986 regulations.
5. The Appointed Person dealt with your appeal in his provisional decision letter of 12 January 1998 and, on receipt of additional information, his final decision letter of 6 April 1998.
6. On the question of pensionable remuneration, the Appointed Person noted that the pensionability of extra shift allowance payments had been resolved but found with THE COUNCIL that they should be assessed on a 7 day week rather than a 5 day one. He found that there was no evidence what the miscellaneous payments represented but concluded that they were made up of sick pay and already included in your basic earnings as pensionable remuneration. Following calculations of his own, he ruled that THE COUNCIL’s assessment was correct.
7. The Appointed Person accepted THE COUNCIL’s interpretation that all earnings must be taken into account when assessing reduction or suspension, as your hours of work were “as and when required” and the standard appointment for casual workers did not refer to non-contractual overtime.
8. The Secretary of State in reaching his decision has had regard to the regulations which in his view apply. When you ceased employment with XXX the 1986 regulations provided for the award of benefits. The regulation governing pensionable remuneration is regulation E22. Regulation E22(1) defined pensionable remuneration as remuneration for the relevant period. In your case it is not disputed that the relevant period was your final year of employment with XXX. E22(11) provided a formula enabling reduction of remuneration during the relevant period to be disregarded. Schedule 1 of the 1986 regulations defined remuneration as “all salary, wages, fees, poundage and other payments paid or made to an employee as such for his own use ... ”. The definition excludes a number of payments including “ ... non-contractual overtime ... ”. It is not disputed that as a manual employee you paid contributions to the Local Government Superannuation Scheme (“the LGSS” as the LGPS was known under the 1986 regulations) of 5% of your remuneration. Your re-employment by XXX while receiving a pension is also dealt with under the 1986 regulations. Regulation E15 provided for reduction or suspension of pension of a person re-employed with an LGSS employer. Regulation E15(11A)(b) required you to notify your in writing the body from whom you were receiving a pension.
9. Dealing first with the question of pensionable remuneration the Secretary of State notes that your remuneration for the relevant period was calculated by multiplying your basic wage and shift allowance by the calendar length of two parts of the relevant period from 26 January 1990 to 31 August 1990 and 1 September to 25 January 1991. In this way your pensionable remuneration was calculated to be £8,704. It is your contention that not all the remuneration on which you paid contributions was accounted for in this period. It is not disputed that where contributions were deducted, payments were pensionable. The Secretary of State takes the view that you have not conclusively demonstrated that the disputed payments were not included in the calculation of pensionable remuneration for the relevant period nor that your pensionable remuneration exceeded £8,704. He therefore dismisses this part of your appeal.
10. Turning to the question of your suspended pension, the intention of regulation E15 of the 1986 regulations is to ensure that a re-employed pensioner does not receive more by way of pension and remuneration from his employment than the remuneration he was receiving before his former employment ceased. Regulation E15(3) requires that pension be reduced to zero if the annual rate of remuneration equals or exceeds your pension and the indexed annual rate of remuneration of your former employment. Regulation E15(8) defines the annual rate of remuneration as the rate on the first day of employment. It does not refer to the actual amount earned in a year. The Secretary of State accepts that regulation E15 does not make specific or direct reference to how the annual rate of remuneration is to be ascertained in the case of a person who is re-employed on an open-ended casual basis where no such annual rate on the first day of employment is quoted. From the evidence available this would appear to be the basis on which you were re-employed. It would also appear that you were not required in the terms of your employment to work a specific number of hours per week, but rather as and when required. Given the clear intention of regulation E15 it is the Secretary of State’s view that because of the open-ended nature of your employment and pay, the annual rate could only sensibly be calculated when your period of employment had been completed, on the basis of the remuneration you actually earned. Since no hours of work were specified in your terms of employment, the pay for all the hours actually worked should be included and the question of overtime does not arise. The Secretary of State concludes that THE COUNCIL’s decision was therefore correct in your particular circumstances.