573            INDEX

 

 

LOCAL GOVERNMENT PENSION APPEAL

 

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (the 1986 regulations)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (the 1995 regulations)

LOCAL GOVERNMENT PENSION SCHEME (AMENDMENT) REGULATIONS 1996 (the 1996 regulations)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)

 

1.      I refer to your letter of 17 February 1999 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 Mr XXX, the Appointed Person, dated 11 February 1999. The Appointed Person upheld the decision of XXX Council (the council) that your professional fees and telephone rental costs were not pensionable remuneration.

 

2.      The question for decision:  The question for decision by the Secretary of State is whether the following are pensionable remuneration within the meaning of the 1995 regulations:

 

a)      your professional fees; and

 

b)     your telephone rental.

 

3.      The Secretary of State has considered all the representations and evidence.

 

4.      Secretary of State’s decision: The Secretary of State has taken into account the appropriate regulations.  He finds your professional fees are not part of your pensionable remuneration but payments for telephone rental are.  His decision replaces that made by the Appointed Person.  The Secretary of State’s reason and the regulatory provisions which he considers apply in your case are set out in the annex to this letter, which forms an integral part of this decision.  He is acting judicially and has no power to modify that way the regulatory provisions apply to the facts of the case.  Having made his decision 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.

 

5.      This completes the second stage of the internal disputes 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 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 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 you: letters dated 17 February, 4, 8 and 12 March, 8 April and 11 June 1999 (with enclosures);

 

b)     from the Appointed Person: letter dated 2 March 1999 (with the enclosures listed in the Department’s letter of 5 March); and

 

c)      from the council: letters dated 29 April, 12 May and 3 June 1999 (copied to you with the Department’s letters of 30 April, 24 May and 9 June).

 

REGULATIONS CONSIDERED AND REASONS FOR DECISION

 

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

 

a)      on 30 September 1986 you commenced employment with the council;

 

b)     you were employed as an Architectural Services Manager (formerly Group Architect);

 

c)      the council paid your professional fees to ARCUK and RIBA;

 

d)     you were eligible to be reimbursed for your telephone rental and the cost of calls on council business;

 

e)      on 31 March 1996 your employment with the council ceased; and

 

f)       none of these payments was included in your pensionable remuneration.

 

3.      You believe that the “personal use” of the telephone rental and professional fees paid by the council amounted to an emolument in kind and therefore should have been included in your pensionable remuneration.  You further believe that other local government employees have had such payments included in their pensionable remuneration.  You say that your contract of employment allowed you to undertake private work with the approval of the chief officer.  You consider that the payment for professional fees therefore had a personal benefit to you.

 

4.      The Appointed Person referred to UKSC pensions Appeals’ Bulletin No. 2 dated August 1998.  With regard to professional fees he stated that “The Secretary of State has previously accepted the argument by the employer that the payment of an employee’s professional fees was for the benefit of the employer rather than for the benefit of the individual for personal needs.  It did not therefore fall within the expression “ all the salary, wages, fees, poundage and other payments paid or made to an employee as such for his personal use”, contained within the remuneration definition”.  He found that he had no reason to believe that your case was any different and that any subsequent appeal would not meet with the same answer.  On the question of telephone rental, the Appointed Person noted that decisions allowing earlier appeals were under the 1986 regulations and that “The 1995 Regulations, which were in force at the time of your retirement in March 1996, removed the expression “allowances in kind” unless specified in the contract of employment as being pensionable”.  He found that it “now seems to possibly exclude telephone rental payments as a pensionable benefit.  The council confirmed that your Contract of Employment did not specify telephone rental as a pensionable item.”.  The Appointed Person concluded “that neither the payment of your professional fees, nor the payment of telephone rental by your employer would constitute a pensionable benefit.”.

 

5.      The Secretary of State notes that the Appointed Person referred to earlier appeals.  Comparison with other appeals is not itself a deciding factor as facts in individual cases may not be identical in key respects.  Appeals have to be decided on the relevant facts in the light of the regulations in force at the time.

 

6.      The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply.  At the time you ceased employment the 1995 regulations were in force.  They were the regulations which had to be used in determining your pensionable remuneration, which had to be calculated by reference to regulation D1.  In defining pensionable remuneration, regulation D1 refers to remuneration for the relevant period.  The relevant period is usually a member’s final year of employment though it may be a different period in certain circumstances (set out in Schedule D1).  In your case, it has not been disputed that it is your final year, from 1 April 1995 to 31 March 1996.  The Secretary of State has therefore limited his consideration to whether the professional fees and telephone rental are “remuneration”.

 

7.      Before the 1995 regulations came into force on 2 May 1995, the 1986 regulations were in force.  The definition of remuneration (in Schedule 1) referred to “all the salary, wages, fees, poundage and other payments paid or made to an employee as such for his own use and the money value of ... other allowances in kind appertaining to his employment ...”.  The definition in the 1995 regulations, when they were introduced, was in regulation C2, which referred to:

 

“(a) all the salary, wages, fees and other payments paid to him for his own use in respect of his employment, and

 

(b) the money value of any benefits provided for him by reason of his employment,

 

and any other payment or benefit specified in his contract of employment as being a pensionable emolument.”.

 

8.      On 28 June 1996, after you had ceased employment, regulation C2 of the 1995 regulations was amended by the deletion of regulation C2(b).  This amendment had effect from 2 May 1995 when the 1995 regulations came into force and therefore applied at the time you ceased employment.  The amendment was introduced by the 1996 regulations.

 

9.      The Secretary of State has first considered whether the professional fees fall within the meaning of remuneration.  He takes the view that the test he has to apply is whether they were paid to you for your own use.  The council in their letter of 29 April 1999 confirmed that your RIBA qualification was required for your post as Architectural Services Manager and that your professional fees were paid via their creditors system.  The Secretary of State notes that you do not dispute that the qualifications, for which the fees were paid, were required for your post; rather, you maintain that your contract of employment allowed you to undertake private work with the approval of the chief officer and that you consider therefore that the payment of professional fees had a personal benefit to you.  The Secretary of State takes the view that because the fees were paid in respect of qualifications which you were required to have in order to hold your post, the council were paying them to enable you to meet the requirements of your employment with them.  He considers that the council made the payments to the appropriate institutions for their benefit and not for your own use.  The fact that, incidentally you may have been permitted to undertake some private work does not, in the Secretary of State’s view, mean payment of the fees was a benefit provided for you or an allowance in kind which had a money value to you.  They do not therefore, fall within the meaning of remuneration.

 

10.  The Secretary of State has next considered the payment of telephone rental.  The Secretary of State notes that you stated in the appeal form dated 28 May 1997 that you did not claim the telephone rental.  The council in their letter of 12 May 1999 stated that you were eligible for reimbursement from the start of your employment to when you ceased.  They added that the payments were an agreement by your Chief Officer and not part of your contract of employment.  In their letters of 29 April and 3 June 1999 the council confirmed that they reimbursed your rental through the payroll system.

 

11.  Although there is an apparent inconsistency in your and the council’s evidence, the Secretary of State accepts that on balance the evidence suggests that you received reimbursement during all your employment with the council.  The Secretary of State does not consider that the payment of the rental lies within the part of the definition of remuneration relating to “salary, wages, fees and other payments paid to him for his own use in respect of his employment”, but he has considered whether it is another benefit with a money value to you.  He notes that the council paid the whole of the telephone rental.  You made business calls and were eligible for reimbursement of the cost of these by the council; this would in the Secretary of State’s view properly be considered to be repayment of expenses.  He takes the view that some use of the telephone was for the purpose of your employment and that this was why the council made the payments; he does not conclude however that its provision was a requirement in order for you to carry out the duties of your post.  The council’s payment of the whole of the rental therefore saved you the cost of paying the rental and the personal use element was thus a benefit or allowance in kind to which a money value could be given.  He concludes that, under the definition of “remuneration” in the 1986 regulations, and under the definition as originally drafted in the 1995 regulations, these payments would have been “remuneration”.

 

12.  The 1995 regulations were amended with effect from their introduction so that the phrase “the money value of any benefits provided for him by reason of his employment” does not form part of them.  The test is whether an “other payment or benefit” is specified in the contract of employment as a pensionable emolument.  The Secretary of State notes that the Appointed Person considers that in your case this test means that the telephone rental payment cannot be considered to be remuneration.  The Secretary of State does not agree.  He accepts that there is no specific written mention in either the first or second versions of your statement of particulars of employment to the effect that the telephone rental is a pensionable emolument.  He does not regard this as conclusive; in his view your contractual terms of employment are not limited to the written statement of particulars of employment.  He notes the council’s statement that you were eligible for reimbursement for the whole of your period of employment, and he notes that the payments were indicated on the Technical Services Department Schedule of Posts for July 1990.  In the Secretary of State’s view, the payments were contractual, and at least until the introduction of the 1995 regulations with effect from 2 May 1995, they were in his view clearly “remuneration” which would have counted as pensionable remuneration to the extent that they fell within the relevant period (your final year).  In his view the amendment in the 1995 regulations does not materially alter this as in the circumstances the payments must accordingly be regarded as implicitly specified in your contract of employment as pensionable remuneration.

 

13.  In all the circumstances the Secretary of State concludes that the payments for telephone rental were remuneration which should be taken into account in assessing your pensionable remuneration.