Local Government Pension Scheme Appeal Determination By The Secretary of State

434 INDEX OUR REF: LGR 85/18/93

Date October 1998

LOCAL GOVERNMENT PENSION APPEAL

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION SCHEME REGULATIONS 1974

LOCAL GOVERNMENT SUPERANNUATION SCHEME REGULATIONS 1986 (the regulations made in 1974 and 1986)

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 12 August 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. The Appointed Person upheld the decision of XXX Borough Council (the council) that the annual payment made to you for a bus/rail pass was not part of your pensionable pay.

2. The Secretary of State’s powers under regulations 102 and 103 of the 1997 regulations are to reconsider 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 of the case.

3. The Secretary of State takes the view that the question for determination is whether the annual payment made to you for a bus/rail pass was pensionable remuneration for the purposes of the 1995 regulations.

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 27 August 1998.

5. Secretary of State’s determination: The Secretary of State having taken into account the appropriate regulations, finds that the annual payment was not pensionable remuneration under the 1995 regulations. His 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 Pensions 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 21 August 1998 (with enclosures); and

b) from you: letters dated 12 August and 8 September 1998 (with enclosures).

REGULATIONS CONSIDERED AND REASONS FOR DECISION

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

a) from 23 February 1970 you were employed in the council’s Public Works Department as a painter;

b) from 1977 you were a UCATT convenor in the Chief Executive’s Department;

c) you were paid annually in arrears the cost of an annual travel card; and

d) on 30 May 1997 you retired from local government employment.

3. You appealed to the Appointed Person that your final pensionable pay did not include lump sum payments which you used to purchase an annual travel card. You contend that the payment was in lieu of weekly amounts known as general conditions payments which were deemed pensionable by your employer in 1991 for other employees. You pointed out that as a convenor you were entitled to the normal terms and conditions of your original employment as if you had continued in that employment and therefore your travel expenses should have been treated as a general conditions allowance.

4. The Appointed Person found that travel expenses were specifically excluded from pensionable pay by the relevant regulations. His view was that the reimbursement you received was clearly for travelling expenses unlike general conditions payments which were considered pensionable as they were liable to tax, national insurance contributions as well as LGPS pension contributions.

5. The Secretary of State, in reaching his decision, has had regard to the regulations which, in his view, apply. When you ceased employment, the 1995 regulations applied. “Pensionable remuneration” is defined in regulation D1. Regulation C2 says what remuneration consists of. It excludes, at sub-paragraph (2)(b), “any travelling or subsistence allowance or any other allowance paid to an employee in respect of expenses incurred in relation to the employment”. The same exclusion had effectively applied in the predecessor regulations made in 1986 and 1974, that is throughout your duties as UCATT convenor. In the Secretary of State’s view the key question is whether the payments made to you lie within the terms of this exclusion.

6. The Secretary of State has considered all the evidence. He notes your argument that the annual lump sum payments made to you were in lieu of, and cheaper than, the weekly general conditions payments made to other officers for travelling expenses which the council treated as pensionable remuneration. However, the Secretary of State can consider neither the status of payments to other officers (because these are not the subject of an appeal to him), nor whether it was fair and reasonable for the council to make the payments to you in the form that they did (because your terms and conditions are an employment, not a pensions, matter). He simply has to decide what the regulations require in your case; that is, whether, on the facts of the case, the payments to you were travelling allowances or expenses in the sense of exclusion (b) above.

7. The Secretary of State notes that you had to travel in the course of your duties; that to do so you bought an annual bus/rail pass; and that the council reimbursed you the cost of this pass by annual lump sum payments. Effectively, therefore, the payments were to cover travelling expenses incurred while carrying out your duties. As such, the Secretary of State takes the view that they clearly fall within exclusion (b) of regulation C2. So they do not constitute remuneration, and cannot be treated as pensionable.