Local Government Pension Scheme Appeal Determination By The Secretary of State

420 INDEX Our Ref: LGR85/18/078

16 September 1998

LOCAL GOVERNMENT PENSION APPEAL

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (“the 1986 regulations”)

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

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (“the 1997 regulations”)

1. I refer to your letters of 12 May and 1 July 1998 in which you appeal (under regulation 102 of the 1997 regulations) against the decision of Mr XXX, the Appointed Person for XXX Council (the council). The Appointed Person determined that externalised employees, when they reached age 50 would no longer be employees of the council and would not qualify for release of their local government pensions; that those employees who chose to leave their accrued benefits in the XXX Fund would receive their benefits at their Normal Retirement Date; and that NRD is 64 or at or after age 60 when 25 years membership in the pension scheme has been accrued.

2. It is noted that you refer to others who you believe are in the same situation as yourself. The Secretary of State takes the view that he can only reconsider issues of disagreement on appeal that refer specifically to the appellant. This is because each case must be considered on its merits and not all the circumstances relevant to one appellant may be applicable to another. The Secretary of State therefore considers that the question for determination is whether you are entitled to your local government benefits on reaching the age of 50 as you had been transferred from local government employment to the private sector prior to that.

3. The Secretary of State has considered all the representations and evidence. Mr XXX has confirmed that the evidence he took into account in reaching his decision was copied by you to the Department.

4. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that you are not entitled to your local government pension scheme benefits at age 50. 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. 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. This completes the second stage of the Internal Dispute Resolution Procedure. 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).

6. The Pensions Ombudsman may also investigate and determine any complaint or dispute of fact or law in relation to the local government pension scheme 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 Mr Hanlon: letters dated 12 May and 1 July 1998, with enclosures; and

b. from the Appointed Person: letter dated 17 July 1998.

REGULATIONS CONSIDERED AND REASONS FOR DECISION

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

a. you were employed by council; and

b. you ceased employment with the council as a result of the work being transferred to XXX Ltd.

3. You believe that because you were compulsorily transferred from the council to XXX Ltd you should be entitled to your local government pension benefits when you attain age 50 on the basis that those members aged 50 or over who were transferred to XXX Ltd were paid their local government pension benefits immediately . You maintain that this would treat all members transferred to XXX Ltd impartially, fairly, and in their best interests.

4. The Appointed Person explained that the council had sought legal advice on whether a transfer of the County’s functions to an external organisation would qualify for early release of the pension to those of eligible age and service. In consequence of the advice the council felt they were bound to release the pension benefits for those eligible employees age 50 or over when they were externalised. The Appointed Person determined that those employees who had been externalised before reaching the age of 50 would no longer be employees of the council on reaching age 50. Those who had accrued benefits in the XXX Fund would receive their benefits at their Normal Retirement Date (NRD), i.e age 64 or at or after age 60 when 25 years membership in the pension scheme had been accrued. He explained the circumstances in which pension scheme benefits could be paid early, but which he determined did not apply in your case.

5. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. From the papers received it is not clear when you transferred to XXX Ltd; however, because the provisions of the 1986 regulations, the 1995 regulations and the 1997 regulations (which are now in force) are similar it is not considered that this information is relevant. The regulations provide for the payment of local government pension scheme (LGPS) retirement benefits at age 50 without actuarial reduction only in a limited number of circumstances. Apart from ill-health grounds (when they may be paid at any age), these are on compassionate grounds, or where a member of the LGPS has attained the age of 50 and is made redundant or ceases employment in the interest of the efficient exercise of the council’s functions. For payment on grounds of redundancy or efficiency, the Secretary of State takes the view that the regulations require the member to have attained the age of 50 at the time they cease employment, and no payment is due on these grounds if cessation is earlier (there are other regulations permitting compensation to be paid in such cases). Although a decision on why a member ceases employment is for the council, the Secretary of State takes the view that for the purposes of the LGPS, regulation D6 of the 1995 regulations and regulation 26 of the 1997 regulations are designed to confer an immediate benefit on employees aged 50 or over who are dismissed or who resign on structural grounds, that is the more efficient exercise of the local authority’s functions. He takes the view that where an employee is not so dismissed nor so resigns, and is still in an employment at the date of the transfer of the undertaking which by virtue of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (as amended) is regarded as continuous, he is not entitled to immediate payment of his LGPS benefits.

6. By the same token, the Secretary of State takes the view that when you transferred to XXX Ltd, your transfer was not to be regarded as a cessation on the grounds of redundancy or in the efficient exercise of the council’s functions. Furthermore, in your case you had not attained the age of 50 when you transferred to XXX Ltd. You therefore fail to meet the two combined tests to qualify for the early payment of your benefits. If you were to cease employment with XXX Ltd at the age of 50 you would not be employed by the council at the time and so would not meet the criteria for payment of LGPS benefits to be paid early in those circumstances. For the reasons set out above the Secretary of State concludes that you are not entitled to early payment of your LGPS benefits at age 50.

7. It is noted that the Appointed Person in his letter has stated that NRD is 64. The view is taken that this may be a typing error. In the circumstances referred to NRD is 65 (regulation C3 of the 1995 regulations).