714 INDEX
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (the 1995 regulations)
LOCAL GOVERNMENT PENSION SCHEME (TRANSITIONAL PROVISIONS) REGULATIONS 1997 (the 1997 transitional provisions)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)
1. I refer to your letter of 21 October 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 Council (the council).
2. Your appeal was on the basis that the benefits you received on retiring under the 1997 regulations were not equal to the benefits you would have received under the 1995 regulations, in that the higher lump sum you received did not match the loss of annual pension and because of the lack of provision for capitalising outstanding contributions in respect of pre-1972 service. You maintain that an additional period of membership should therefore have been granted.
3. The Appointed Person initially dismissed your appeal on 23 April 1999 on the grounds that the council had acted reasonably in not augmenting your membership. This was the decision against which you appealed to the Secretary of State on 21 October 1999.
4. The Appointed Person, in a letter dated 9 January 2000, subsequently conceded that “in retrospect my judgement was a little reserved”, and that he may have “failed to give adequate weight to [your] comments”. Acting as Pensions Manager as well as Appointed Person, he then referred the matter for actuarial advice. In a letter dated 20 March 2000 enclosing actuarial advice (copy enclosed), he has decided that you are worse off under the 1997 regulations and proposes to increase your pension retrospectively.
5. The question for decision: The Secretary of State’s powers under regulation 102 are to re-consider the original disagreement referred to the Appointed Person under regulation 100. This refers to a matter in relation to the Scheme, which effectively means whether the rules governing the LGPS have been properly implemented. Like the Appointed Person, the Secretary of State has no powers under regulation 102 to consider disagreements relating to the Local Government (Discretionary Payments) Regulations 1996.
6. The Secretary of State takes the view that the question for decision is whether the council have complied with the 1997 transitional provisions in deciding that your 1997 scheme benefits were equal to entitlements calculated under the 1995 scheme and that your membership should not be increased.
7. Secretary of State’s decision: The Secretary of State has considered all the representations and evidence and has taken into account the appropriate regulations. He finds that the council have not complied with the 1997 transitional provisions and must now decide whether your scheme membership must be increased following a re-assessment of whether your 1997 scheme benefits equal entitlements calculated under the 1995 scheme, in the light of actuarial advice. His decision replaces the first decision made by the Appointed Person on 23 April 1999. It does not replace nor confirm that contained in his letter dated 20 March 1999 which is not the subject of the appeal. The Secretary of State takes the view that any appeal against that later decision would be a fresh appeal which would, in the first instance, have to be considered by another Appointed Person.
8. The Secretary of State’s reasons 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 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.
9. 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 020 7233 8080).
10. The Pensions Ombudsman may investigate and determine any complaint of maladministrationor any 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 020 7834 9144).
11. A copy of this letter has been sent to the Appointed Person.
EVIDENCE RECEIVED
1. The following evidence has been received and taken into account:
(a) from you: letters dated 21 October and 11 December 1999 (with enclosures); and
(b) from the Appointed Person: letters 26 November 1999 and 31 January 2000 and enclosures (copies sent to you with the department’s letters of 2 December 1999 and 4 February 2000) and 9 and 10 January and 20 March 2000 and enclosures (copies attached).
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
(a) your date of birth is 7 August 1944;
(b) on 4 September 1962 you commenced pensionable employment (and started accruing LGPS membership);
(c) on 4 August 1998 you were awarded immediate payment of your retirement benefits on redundancy;
(d) when you ceased employment you had purchased 3 years 307 days pre 1 April 1972 service to offset reduction in retirement grant to cover widow’s benefit contributions for 9 years 209 days; and
(e) your membership was reduced by 230 days to offset unpaid widow’s benefit contributions when your retirement benefits were calculated.
3. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. On 1 April 1998 the 1997 regulations replaced the 1995 regulations for active LGPS members. The 1997 transitional provisions had the effect of saving entitlements of members with rights under the 1995 regulations so they can have effect under the 1997 regulations. The aim was that no reduction in the value of the benefit package should be suffered as a result of the transition. The facility to make payments under the 1995 regulations for pre 1972 membership contributions to avoid reduction in retirement grant ceased with the introduction of the 1997 regulations. Where these payments were not completed regulation 8 of the 1997 transitional provisions required reduction of pre 1972 membership period by 11 per cent. Under regulation 13 where a member becomes entitled to immediate payment of benefits under the 1997 regulations, if the council determine that these benefits would have been greater under the provisions of the 1995 regulations they must resolve to increase the member’s total membership (augment). Before deciding whether benefits would have been greater under the provisions of the 1995 regulations the council “must consider the advice of an actuary if they consider it appropriate” under regulation 13(4) of the transitional regulations. A resolution must be made by the council within six months of the date the amount of benefit becomes known (regulation 13(6)).
4. The Secretary of State has considered all the evidence regarding your complaint about the level of your benefits. It is not disputed that the 1997 regulations must produce benefits equal in value to members with accrued membership period under the 1995 regulations. Nor is it disputed that membership must be augmented to restore any difference. The Secretary of State notes you claimed that the changes in LGPS provision brought about by the introduction of the 1997 regulations led to you losing benefit entitlement. The Secretary of State notes that the Appointed Person addressed the question whether the council acted reasonably in the advice they relied on to decide whether to augment your membership. He concluded that the council based their decision not to augment on this department’s informal advice and FAQ’s on their web-site and that in his view the council had sought sufficient advice and acted reasonably. The Secretary of State takes the view that informal general advice, which cannot cover the precise circumstances of individual cases, cannot constitute a formal interpretation of the requirements of the regulations and cannot override the LGPS provisions. The Secretary of State does not consider, therefore, that the council should have relied solely on the Department’s general informal advice but should have had regard to the provisions in regulation 13(4) of the 1997 transitional provisions to take actuarial advice. However, the Secretary of State notes that since your appeal the Appointed Person has sought the advice of an actuary and found that your 1997 benefits are not equal to those which would have been calculated under the 1995 regulations. The Secretary of State takes the view that as it is found that you have lost benefits as a result of new provisions introduced by the 1997 regulations the council have a duty to resolve to augment your membership as required by regulation 13(2) of the transitional regulations.