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 REGULATIONS 1997 (the 1997 regulations)

1.      I refer to your letter of 18 January 2000 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 complaints are that the council failed to give you proper advice in 1993 about transferring your accrued rights from the Teachers’ Pension Scheme (TPS) to the LGPS, and that they should have used their discretion to allow you to make such a transfer in 1997.

3.      The Appointed Person decided that he was unable to make a decision on your appeal as he had no jurisdiction to determine issues of correct exercise of a discretion or of maladministration.

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.  This regulation refers to a matter relating to the LGPS, which effectively means whether the provisions governing the LGPS have been correctly applied in the circumstances.  There are no provisions to award compensation where claims are made that inadequate information has been provided with regard to the LGPS.  Like the Appointed Person the Secretary of State has no powers to direct a local authority to act outside the provisions of the regulations.

5.      Under the 1997 regulations the Secretary of State will not overturn a decision where the council have exercised a discretion.  His role is, rather, to ensure that the discretion has not been exercised unreasonably or improperly and, in cases where it has, to determine that the matter should be reconsidered in a proper manner.

6.      The questions for decision: The questions for decision by the Secretary of State are whether there was maladministration by the council in relation to information about transfer of pension rights into the LGPS in 1993, and whether they acted unreasonably or improperly in not accepting your request for a transfer of pension rights in 1997.

7.      The Secretary of State has considered all the representations and evidence.  Copies of documents supplied by the Appointed Person were sent to you under cover of the Department’s letter of 7 March 2000.

8.      Secretary of State’s decision: The Secretary of State has taken into account the appropriate regulations.  He finds no conclusive evidence of maladministration by the council in relation to information given to you about transferring your accrued pension in 1993.  He also finds that the council were entitled to use their discretion in deciding whether to accept a transfer request outside the 12 month period in the 1995 regulations, and their decision not to do so in 1997 was not an unreasonable one.  However, he is not satisfied that they acted properly in reaching and informing you of that decision.  He finds you cannot now transfer your accrued TPS rights and has decided not to refer the matter back to the council for re-consideration.  He has no powers to award compensation even if maladministration were shown to have occurred causing financial loss or injustice.

9.      The Secretary of State’s decision replaces that made by the Appointed Person but he dismisses your appeal.  His reasons and the regulatory provisions which he considers apply in yourcase 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.

10.  The Secretary of State noted your complaint that the Appointed Person may not have made all the evidence available which he considered during the first stage of your appeal.  Since that matter was not part of your original disagreement the Secretary of State does not have the power to consider it.  The Secretary of State is satisfied that you have seen all the papers considered during the second stage of your appeal.

11.  You referred to the inclusion in the evidence of a document headed “Widowers Pensions Buy Back Waiving of Time Limits”.  The Secretary of State is unclear why this has been forwarded to him and believes it to be irrelevant as it does not appear to relate to time limits in relation to transfer of pension rights.  He has not taken it into account.

12.  The Secretary of State does not consider your 2 sheets of curriculum vitae to be relevant and I am accordingly returning them to you.  He has not taken them into account.

13.  This completes the second stage of the internal dispute resolution procedure (IDRP).  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).

14.  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 Pension Schemes Act 1993.  His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 020 7834 9144).

15.  A copy of this letter has been sent to the Appointed Person andyour pension manager.

 

Yours faithfully

 

 

K A BLOOMFIELD

ENC.

EVIDENCE RECEIVED

1)      The following evidence has been received and taken into account:

a)      from you: letters dated 18 January and 20 March 2000 (with enclosures); and

 

b)      from the Appointed Person: letter dated 29 February 2000 (with the enclosures copied to you with the Department’s letter of 7 March 2000).

REGULATIONS CONSIDERED AND REASONS FOR DECISION

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

a)      before 1 January 1993 you were employed full-time by XXX and were a member of the Teachers’ Pension Scheme (TPS);

b)      on 30 October 1992 you completed form A65 in respect of your prospective employment with the council; in part J headed “TRANSFER OF PENSION RIGHTS” you requested that the council approach your former (then current) employer/pension Scheme for a quotation in respect of a transfer;

 

c)      on 1 November 1992 you wrote to the council enclosing form A65 and saying that     “ … I do wish to join your superannuation scheme … ”;

 

d)      on 1 January 1993 you took up part-time employment with the council;

 

e)      on 25 January 1993 the council wrote to the Teachers’ Pension Agency requesting a transfer value computation of your pension rights;

 

f)        on 13 October 1993 the Teachers’ Pension Agency sent the council a transfer value payable in respect of your TPS rights;

 

g)      on 28 October 1993 the council sent you the transfer valuation of your TPS rights and asked you to complete a transfer election form and “to comply with the time limits imposed by the superannuation regulations” to return it by 30 November 1993;

 

h)      on 5 January 1994 you wrote to the council requesting clarification of certain LGPS benefits before you made a decision about transferring;

 

i)        on 7 September 1994 the council wrote to you about the possible transfer of your TPS rights saying “To date we have not received any instructions and unless I hear to the contrary by the 23^rd September 1994 I shall assume that the transfer is not to proceed”;

 

j)        in April 1996 you went on long-term sick leave;

 

k)      following some initial enquiries, you asked the council on 13 February 1997 whether it might be possible to transfer your previously accrued pension rights to your current scheme explaining that you were on long term sick leave and might be forced to retire on ill-health grounds;

 

l)        on 23 January 1997 the council wrote to you saying “...a transfer of pension benefits...is no longer possible as you have exceeded the time limits...”;  on 29 January 1997 they informed you that “under regulation K16(2)(d) ...a transfer payment must be made within 12 months of joining...”; and on 26 February 1997 they wrote to say that the council could accept a late transfer but must have “regard both to the benefit of the Scheme Member and the fund”; having consulted their actuary who “confirmed that in circumstances such as yours, the fund would be disadvantaged by accepting a late Transfer Value in circumstances were ill health retirement was imminent” the council refused to accept a transfer of your pension rights from the TPS; and

 

m)    on 12 January 1998 you retired on ill-health grounds.

 

3)      Your appeal to the Appointed Person was on the basis that the council failed to give you full information and advice on the effects of not transferring your pension and on the time limits for transfer; and that the council should have used their discretion to allow a late transfer and may have discriminated against you by not doing so.

4)      The Appointed Person found that he did not have jurisdiction “ … to determine issues of correct exercise of discretions … nor of alleged maladministration” and that your dispute with the council was not one about the “ … application of the Pensions Regulations … ”.

5)      The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply.  When you started work with the council the 1986 regulations applied.  If, within 12 months from the date you became a pensionable employee with the council, you had made a written request for a transfer of previously accrued pension rights into the LGPS fund administered by the council, the council were required to accept a transfer.  Otherwise it was for the council to decide whether to accept a request (regulation J8).  On 2 May 1995 the 1995 regulations replaced the 1986 regulations.  They contained similar provisions for the transfer of pension rights (regulation K13).  Until the IDRP was put in place with effect from 6 April 1997 the Secretary of State could not decide questions on appeal where an employer exercised a discretion under the 1986 or the 1995 regulations.  Amendments to Part J of the 1995 regulations gave powers to an Appointed Person and extended the Secretary of State’s powers to consider a disagreement about any matter in relation to the LGPS.

6)      The Secretary of State has considered all the evidence.  It is not disputed that you did not make an election within 12 months to require the council to arrange a transfer of your pension rights under regulation J8(1) of the 1986 regulations.  The Secretary of State notes that the Appointed Person considered that he did not have the jurisdiction to re-consider a decision made by the council under discretionary powers in 1997.  However, the Secretary of State takes the view that a question regarding the council’s exercise of discretion can be considered where an application to appeal is accepted under IDRP even where, as in your case, the act or omission resulting in a complaint took place before the relevant amendments to Part J of the 1995 regulations.  The Secretary of State has therefore considered whether, in the circumstances of your case, the council acted unreasonably in not extending the period for accepting a transfer of pension rights and whether they gave the decision proper consideration.

7)      The Secretary of State has first considered whether you were sufficiently informed of your right to transfer your TPS rights to the LGPS and its consequences.  Although this matter dates back some time, he accepts that it is relevant to consider it because of its possible bearing on the reasonableness of the council’s later decision not to allow a late transfer of benefits.  He notes that Form A65 which you completed before you started employment with the council included a question about such a transfer to which you responded.  In a letter to the council dated 18 January 1993 you sought information on “what will happen to final calculations as a result of my previous 20 years full-time contributions” in the context of a query about transferable rights.   The council wrote to you on 28 October 1993 informing you of the value of the rights transferable from the TPS and asking whether you wished to accept a transfer; they also clearly stated that there were time limits imposed by superannuation regulations and asked you to complete and return a form by 30 November 1993. Your letter to the council dated 5 January 1994 requested clarification of death in service and partners’ benefits in the LGPS, including the effect of transferring your accrued TPS rights on death benefits.  The Secretary of State notes that the council’s copy of this letter was annotated “Phoned Ms XXX 21.2.94”.  There is no evidence of further contact between you and the council about the transfer until the council wrote on 7 September 1994 and gave you until 23 September 1994 to respond if you wished to transfer your rights from the TPS.  This letter effectively extended the time limit permitted by the regulation J8 of the 1986 regulations by approximately 8 months.  It has not been shown that the council specifically notified you of the 12 months provision or its implications, or that it could be extended at their discretion, but they clearly told you of a time limit imposed by the regulations, and their letter of 7 September 1994 clearly implied a final opportunity.  While you now say you were not satisfied with the council’s responses to your queries there is no evidence that you followed these up at the time. You do not contend that you needed or requested further time to make a decision beyond 23 September 1994, and the Secretary of State concludes that you were content to leave your accrued rights in the TPS and had decided to do so.  He does not consider there is any evidence to suggest that your decision would have been any different if you had known specifically of the 12 months provision.

8)      The Secretary of State notes that you contend that the council did not advise you of the full implications of not transferring your pension, for example if you had to retire early through ill-health.  He also notes that you sought advice other than from the council and you claim that this advice was unsound, but also that “officers” withheld vital information. In the Secretary of State’s view, the council was required to provide sufficient information to enable you to make an informed decision, but not to give advice on what decision to make in particular circumstances.  The Secretary of State takes the view that the provision of information cannot reasonably cover every permutation of possible circumstances.  He notes that you were aware of your right to a transfer and were given a transfer value, and were told you had to opt by a specified date.  It has not been shown that the council failed to inform you about the benefits generally available under the LGPS.  He does not regard the non-inclusion of estimated ill-health benefits on annual benefits statements, which in any case are not required by the regulations, as a failure to give adequate information.  He accepts that evidence is lacking whether the council promptly and fully dealt with your specific questions, but he does not find that you have convincingly shown that the council gave you clearly inadequate information on which to make an informed decision.  There is in his view no conclusive evidence of maladministration by the council on this score.

9)      The Secretary of State next considered the council’s decision not to accept your request in 1997 for a transfer of your accrued TPS rights.  It is not disputed that while the council had discretion to accept a late transfer they were not statutorily required to do so.  However, the Secretary of State has reviewed the council’s decision to see whether it was unreasonable or improperly taken.  He notes that the council told you on 23 January 1997 that a transfer was not possible because your application was out of time, and on 29 January 1997 that a transfer payment had to be made within 12 months of joining the LGPS.   No question of a discretion was mentioned.  Subsequently, in the letter of 26 February 1997 from Mr XXX the council said that they could accept a late transfer but must have regard to both the benefit of the member and the fund, and explained that “In your case, I have consulted with our actuary, who has confirmed that in circumstances such as yours, the fund would be disadvantaged by accepting a late Transfer Value in circumstances were ill health retirement was imminent.”

10)  The council’s explanation for their decision to Ms XXX of the National Union of Teachers in Mr XXX’s letter of 6 May 1997 stated that “ … policy on extending the time limits for transferring service, is to deal with each case on its merits.  In exercising its discretion to extend the time limits for transfer values, the Council endeavours to ensure that employees are enabled to secure their pension rights on entry to the Local Government Pension Scheme.  In each case, the Council must ensure that its fiduciary responsibilities to the fund are not compromised.”

11)  In the council’s letter of 15 January 1998 to the Appointed Person when referring to Part K of the 1995 regulations Mr XXX stated “I have no written guidance or policy decisions relating to the exercise of a discretion under those regulations.”

12)  The Secretary of State notes that no formal policy statement on the exercise of a discretion under regulation J8 of the 1986 regulations or regulation K13 of the 1995 regulations has been submitted by the council.  He also notes that neither the 1986 nor the 1995 regulations required the council to make a policy statement on the exercise of their discretion. He accepts that the council had a fiduciary responsibility to the fund.

13)  It does not appear to the Secretary of State that the council had a clear policy on operating their discretionary power to accept a late transfer other than treating each case on its merits and considering the implications to the LGPS fund and not just the benefit to the member.  While the Secretary of State considers that the council might, with advantage, have formulated clearer guidelines, he recognises that the regulations did not require them to publish a policy statement.  He does not find it an unreasonable or an improper approach to treat cases on their merits and to have regard to the implications for the fund.  Since you had had, and declined, an opportunity to transfer your rights when you joined the LGPS, and in the light of his finding that there is no conclusive evidence that you were inadequately informed at that time, the Secretary of State does not regard the council’s decision not to accept a late transfer as an unreasonable one; that is, it is not in his view a decision which no reasonable person could come to.

14)  The Secretary of State does have some concern, however, about the way the council reached their decision and communicated it to you.  Their two letters of 23 and 29 January 1997 both implied that there was an immutable time limit of 12 months which was not, in fact, the case.  They failed to inform you that they had discretion to accept a later transfer, or how that discretion might be exercised.  Only in their third letter dated 26 February did they explain this.  These letters together with their letters of 6 May 1997 (to Ms XXX) and 15 January 1998 (to the Appointed Person) do not, in the Secretary of State’s view, demonstrate such consistency and clarity of approach as he would expect, although he accepts that the council have consistently had regard to the implications for the fund which is not in itself an improper consideration.   Furthermore, he notes with concern that in referring the matter to their actuary, the council implied that ill-health retirement was imminent in your case, when it appears that no such decision had then been made.  The Secretary of State finds nothing wrong in referring the matter to an actuary, nor in taking your state of health, including any potential early retirement, into account.  However, it was not in his view proper to exercise a discretion on the basis of a statement which implied a decision had been taken when in fact it had not been, without any apparent consideration of the underlying assumptions.  For these reasons the Secretary of State cannot be satisfied that the council exercised their discretion properly.  However, as you have now retired, your benefits have been put into payment and you are no longer an active member of the LGPS, you could not now be permitted to transfer your accrued TPS rights.  Because of this, and given that the Secretary of State does not find the council’s decision to be an unreasonable one, he concludes that there would be no advantage in referring the matter back to the council to reconsider.  Furthermore, even if maladministration were shown to have occurred leading to financial loss or injustice, he has no powers to award compensation.  He therefore dismisses your appeal.