Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR85/18/228

12 November 1999

LOCAL GOVERNMENT PENSION SCHEME APPEAL

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)

1) I refer to your letter of 14 September 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, in relation to your local government pension scheme (LGPS) dispute with XXX (the council).

2) The Appointed Person found that he had no power to award you compensation for your claim of financial loss, distress and inconvenience through the council’s maladministration in dealing with your transfer request. He did, however, take the opportunity to examine you case in order to comment on the maladministration issue. In respect of your application to transfer your LGPS benefits abroad he found that the administration team had made reasonable attempts to expedite the matter. However he was not happy with the “fiasco over the payment by cheque”. He found that “ ... the payment errors were not directly the responsibility of the administration team but their paying agents but nevertheless you received a poor service”. He “ ... understood your frustration but to complain that the council should have required their bankers to shortcut any clearance routines is like saying you should have required the Bank of New Zealand to abandon their own in the first place. I am sure that you will concede that neither party has that power over the international banking industry.”.

3) The questions for decision: The questions you have asked the Secretary of State to consider and decide are:

a) who was responsible for the excessive amount of time it took to gain approval for the transfer of your pension benefits;

b) who was responsible for the delay in the actual transfer of the pension benefits from the UK to New Zealand; and

c) which organisation(s) is/are responsible for compensating you.

4) 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. The disagreements you referred to the Appointed Person were:

a) the way the council handled the approval for the transfer; and

b) the method and time taken to transfer the funds after approval was obtained.

5) The question for decision: The Secretary of State considers that the disagreement you raised is effectively whether the parties who handled your transfer severally or collectively are guilty of maladministration.

6) You do not dispute that the CET has been calculated correctly, but you maintain that due to the delay you were disadvantaged financially because there was a decrease in the exchange rate between 27 August 1998 and 29 January 1999. You also believe that you have suffered a loss of fund performance between 27 August 1998 and 29 January 1999.

7) The rules governing the transfer out from a pension fund when a person leaves before retirement are covered by the Pension Schemes Act 1993 (as amended by the Pensions Act 1995) and regulations under those Acts. Broadly the provisions allow a member who has ceased employment to make an application for a cash equivalent transfer (CET). The transfer must be made within 6 months of receiving the application. However, provision is provided for the 6 month period to be extended. Where a transfer is to an overseas scheme not covered by reciprocal agreements and exceeds 1/80^th of the permitted maximum the transfer may not proceed without reference to the Pension Schemes Office (PSO). At the time you sought your transfer 1/80^th of the permitted maximum was £8760.

8) Regulation 100 of the 1997 regulations refers to a matter relating to the LGPS, which effectively means whether the statutory provisions governing the LGPS have been correctly applied in the circumstances. It is noted that one of your claims concerns compensation for loss of fund performance between 27 August 1998 and 29 January 1999. The method of calculating a member’s CET is not based on the performance of an individual fund but is based rather on a method prescribed by the Government Actuary’s Department by virtue of regulation 116 of the 1997 regulations. The Secretary of State has no powers to direct the authority to act outside the provisions of the regulations.

9) The Secretary of State’s decision: The Secretary of State has considered all the representations and evidence submitted and has taken into account the appropriate regulations. He notes that in your letter of 7 January 1998 you enclosed “... a completed form 8 requesting an estimate of the value of my pension benefits in the LGPS to my current provider.”. You also gave details of your scheme provider in New Zealand, along with other information. Approval to the transfer was given by the PSO on 6 November 1998 and a cheque for the CET was “ ... paid on 2Dec98 to XXX Ltd ...”. It is noted that the Appointed Person is unhappy with the “fiasco over the payment by cheque” and considered that you received a poor service. The Secretary of State does not dissent from the Appointed Person’s conclusions and he accepts that the transfer took a long time to effect. However, even where it is shown that maladministration has taken place causing financial loss or injustice the Secretary of State has no power to order redress or award compensation. The Secretary of State’s decision confirms that of the Appointed Person in that neither have power to award compensation.

10) The Secretary of State is acting judicially and has no power to modify the way the regulatory provisions apply to the facts of the case. Having made his decision he has no power to alter it and his officials cannot discuss the case further. The decision is binding and can only be overturned by a judgement of the High Court or the Pensions Ombudsman.

11) 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 that they have failed to resolve. Their address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 233 8080).

12) The Pensions Ombudsman may investigate and determine any allegation of maladministration or 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).