570      INDEX

 

LOCAL GOVERNMENT PENSION APPEAL

 

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (the 1995 regulations)

LOCAL GOVERNMENT PENSION SCHEME (TRANSITIONAL PROVISIONS) REGULATIONS 1997 (the transitional regulations)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)

 

1.                  I refer to your letter of 16 April 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.

2.                  The Appointed Person upheld the decision of the XXX (the council) that the additional contributions paid by you to avoid reduction in your lump sum benefits (retirement grant) for pre-1972 service (membership) cannot be refunded nor other benefits granted even though they may not bring you additional benefits if you retire at or after the age of 60.

3.                  The question for decision: It would appear from your letter that you are not questioning the Appointed Person’s decision on the issue whether the 1997 regulations have been applied correctly.  Rather you maintain that the provisions of the regulations are inequitable as you have paid additional contributions and will receive no additional benefits.  The question for decision is therefore whether you can be granted a refund or some benefit to reflect the additional contributions made.

4.                  Secretary of State’s decision: The Secretary of State upholds the decision of the council that no refund or additional benefit can be granted.  His decision confirms that of the Appointed Person.  His reasons are set out in the annex to this letter, which forms an integral part of his decision.

5.                  You should note that 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 LGPS, which effectively means whether the rules governing the LGPS have been correctly applied in the circumstances.  The Secretary of State has no power to modify the way the regulatory provisions apply to the facts of the case.  The appeals procedure can only examine whether the regulations have been applied properly; it is not a means of examining whether the regulations themselves are fair or of changing them.  The regulations can only be changed by statutory instrument.

6.                  Having made his decision the Secretary of State has no power to alter it but you may refer the matter to the Pensions Ombudsman or to the High Court.  For that reason, the Secretary of State’s officials cannot discuss the case further.

7.                  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 number 0171 233 8080).

8.                  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 you: letter dated 16 April 1999 (with enclosures); and

(b)               from the Appointed Person: letter dated 3 May 1999 (a copy of which was enclosed with the department’s letter of 17 May 1999).

REGULATIONS CONSIDERED AND REASONS FOR DECISION

2.                  The Secretary of State has considered the regulations which in his view apply together with all the representations and evidence including documents supplied by the Appointed Person as listed in the department’s letter to you of 17 May 1999. Under the 1995 regulations and earlier regulations, a married member had to surrender part of his lump sum retirement grant to pay for the liability for a widow’s pension in respect of his pre-1972 service.  However, the regulations permitted an option, which you chose to take up, of paying additional contributions instead of suffering a reduction in the lump sum.

3.                  With the introduction of the 1997 regulations with effect from 1 April 1998, regulation 8 of the transitional regulations provided for the reduction in the retirement grant to be replaced with an adjustment reducing pre-1972 membership by 11%.  The regulations provided that if you continued to pay additional contributions, this reduction in membership would not apply.  Your position would then be no different from what it had been under previous regulations.  By ceasing to pay such contributions, however, your membership is reduced by 11%, not of the whole period of pre-1972 membership, but of the unpaid part (thus recognising the value of the contributions paid).  In practical terms, the contributions are now therefore treated as “buying out” the reduction in membership rather than a reduction in the lump sum.

4.                  You maintain that, by age 60, your membership even with the reduction will exceed the 40 years’ maximum, and therefore the reduction will have no practical effect on your pension benefits.  The additional contributions have therefore, in practice, bought you no advantage as under the 1997 regulations and the associated transitional provisions you will receive the same benefits as you would have if you had not elected to pay additional contributions, assuming you retire at age 60.  You consider it inequitable that your contributions cannot be refunded or your benefits increased to recognise the additional contributions paid.

5.                  The regulations do not provide for contributions to be refunded nor your retirement benefits increased.  As the Appointed Person explained this would be contrary to Inland Revenue rules which apply to tax approved pension schemes such as the LGPS.  The requirements, contributions and benefits in the LGPS are governed by the statutory regulations in force at the particular time.  These regulations may be changed to allow developments and improvements to the scheme over time.  New provisions replace old provisions from a particular date; they do not nullify the requirements of the previous regulations for the period when they were in force.  The Secretary of State recognises that in the particular circumstances of your case, the way you are paying for your pre-1972 service under the 1997 provisions (by reduction of membership) may be more advantageous to you than the way you paid under previous regulations (by additional contributions), in that it may not in practice affect the level of your benefits.  The fact that in your particular circumstances the introduction of the 1997 provisions may have been equally advantageous even if you had not previously chosen to pay additional contributions does not mean that that the regulations can provide for a refund of contributions or increased benefits.