777      INDEX

Our Ref: LGR 85/18/262

10 July 2000

LOCAL GOVERNMENT PENSION APPEAL

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1974 (the 1974 regulations)

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (the 1986 regulations)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (the 1995 regulations)

LOCAL GOVERNMENT (DISCRETIONARY PAYMENTS) REGULATIONS 1996 (the Discretionary Payments 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 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 (the council).

2.                  The Appointed Person looked at your dispute in two parts.  The first part he considered as a complaint about your “additional voluntary contributions” and the second as a complaint about the decisions made by the council on LGPS entitlements linking them to reasonableness, transparency and manner of decision making undertaken by the council.  He found in your favour on the first part and proposed a remedy.  He upheld the council’s decision on your entitlement to benefit.

3.                  In referring your dispute to the Secretary of State, you maintain your original complaints against the council.  In particular you feel that your concerns regarding the exercise of discretion in your case, the process of decision making and the timing and implementation of decisions regarding changes in the LGPS have not been considered.  You also question the Appointed Person’s independence from matters regarding your dispute.

4.                  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.  The Secretary of State has no powers to award compensation even where it is shown that maladministration has taken place leading to financial loss or injustice.  Therefore, the question for decision by the Secretary of State is whether the council have complied with the 1997 regulations in calculating your benefits.

5.                  The Secretary of State has considered all the representations and evidence.  Copies of documents supplied by the Appointed Personwere sent to you under cover of the Department’s letter of 8 March 2000.  The Secretary of State has considered all the representations and evidence.

6.                  Secretary of State’s decision: The Secretary of State has taken into account the appropriate regulations.  He finds that the council failed to deduct additional contributions which has resulted in a potential loss of benefit, and they must now put that right.  In other respects, the council have complied with the 1997 regulations in calculating your LGPS benefits.  He finds that he has no powers to consider disagreements about the award of a credited period under the Discretionary Payments regulations in so far as it relates to the LGPS.  His decision confirms that made by the Appointed Person.  The Secretary of State’s 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.

7.                  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 which they have failed to resolve.  Their address is 11 Belgrave Road, London, SW1V 1RB (telephone number 020 7233 8080).

8.                  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).


EVIDENCE RECEIVED

 

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

 

a) From you:  letters dated 18 January 2000 (with enclosures), 4 February 2000 and 27 March 2000;

 

b) From the Appointed Person:  letters dated 7 March 2000 (with enclosures) and 7 July 2000 (copy enclosed).

 

2.      In your letter of 27 March, you referred to four documents not supplied by the Appointed Person.  The Department wrote to the Appointed Person on 19 June about these. The Department wrote to you on the same day to say that the papers may not necessarily contain information relevant to the appeal and that unless you wanted the time limit for his decision to be further extended, the Secretary of State would prefer to proceed with the decision than to wait for additional information.  Although you did not seek a further extension, the Department explained in their letter of 6 July that a reply from the Appointed Person was imminent and that the Secretary of State’s decision would be held over.  On a full consideration of all the papers, the Secretary of State is satisfied that the Appointed Person’s letter of 7 July adds no significant new material and that he has sufficient evidence in his possession to reach a decision on your case.  He has not therefore sought your comments on the Appointed Person’s letter before issuing his decision.

 

RELEVANT POINTS

 

3.      From the evidence the following relevant points have been noted:

 

a)  You were employed by the council and were a member of the LGPS;

 

b)  You elected to make payments to purchase extra service with effect from 24 January 1985 until 23 January 2004;

 

c)  The council ceased deducting these contributions during tax year 1991/1992;

 

d)  You ceased employment on grounds of redundancy on 24 January 1999;

 

e)  You were awarded a credited period of 6 years and 243 days under the Discretionary Payments regulations.

 

GROUNDS OF COMPLAINT

 

4.      Your complaint to the Appointed Person fell into two parts: the council’s failure to deduct “Additional Voluntary Contributions” (AVCs) with your consequent loss of benefit entitlement; and your award of “compensatory added years”, where you question the council’s policy and how it was made, and maintain that the council should have used their discretion to make a higher award.  You also question the independence of the Appointed Person whom you say appears to have been previously involved in the matters on which he has adjudicated.

 

REGULATIONS CONSIDERED

 

5.      The Secretary of State has had regard to the regulations which in his view apply.  It is understood that your purchase of “AVCs” started as the making of periodical payments under regulation D13 of the 1974 regulations.  Those regulations were replaced by the 1986 regulations and in turn by the 1995 regulations and, in respect of active members, by the 1997 regulations.  All these latter sets of regulations contain provisions for making additional payments to increase retirement benefits, currently either by the purchase of added years (regulation 55 of the 1997 regulations) or by making additional voluntary contributions (Chapter IV of Part III of the 1997 regulations).

 

6.      When you ceased employment with the council the 1997 regulations applied.  Under regulation 26 a member aged 50 or more who retires by reason of redundancy is entitled to immediate payment of pension benefits. Under regulation 52 in Part III, an employing authority may resolve to increase the membership of a member leaving employment on or after age 50 (“augmentation”).  Augmentation is at the employer’s discretion, but is subject to maximum amounts, depending on circumstances.  No award may exceed 6 years and 243 days, nor may any award be made where a credited period has been awarded under the Discretionary Payments regulations. Scheme employers and administering authorities as appropriate were required to make resolutions in respect of certain regulations and to formulate, publish and keep under review their policy on exercising the various discretions available to them including those under Part III.

 

7.      Regulation 100 allows a scheme member to refer a disagreement with a scheme employer about a matter in relation to the scheme, to an Appointed Person, and subsequently, under regulation 102, to the Secretary of State.  Regulation 99 provides that an application must not be referred to an Appointed Person who has previously been involved in the subject matter of the dispute.  The scheme is defined in Schedule 1 as the occupational pension scheme constituted by the 1997 regulations, the Transitional regulations and the 1995 regulations.

 

8.      When you ceased employment the Discretionary Payments regulations were in force.  Regulation 8 made provision for the award of a credited period.  It empowered an employer to award a credited period to employees age 50 or over who were made redundant.  Such awards were at the employer’s discretion and subject to maximum amounts, the highest of which was 10 years.  A credited period could not be awarded where augmentation under the LGPS was given.  Regulation 10 provided that annual compensation, calculated in the same way as an LGPS pension, was payable where a credited period had been awarded.  Regulation 45 contained provisions for appeals.  There was no appeal power in respect of the credited period provisions.

 

REASONS FOR DECISION

 

9.      The Secretary of State has considered all the representations and evidence.  He notes your comment about the Appointed Person’s independence.  He notes the Appointed Person’s comments in his letter of 7 March 2000.  He takes the view that a “dispute” in regulation 100 refers to a member’s personal disagreement about his individual rights under the scheme.  He is satisfied that there is no evidence that the Appointed Person was directly involved in any decisions about your individual rights under the LGPS, and he has therefore not been involved in the subject matter of the dispute in the sense intended by the regulations.

 

10.  In relation to your dispute about your additional contributions, the evidence appears to the Secretary of State to indicate that the council ceased deducting contributions in 1991/92 in error.  Like the Appointed Person, the Secretary of State would have expected you to notice that the council were no longer deducting contributions, but he can find no clear evidence to suggest that they ceased doing so on your instruction.  It appears to the Secretary of State however that the Appointed Person effectively upheld your complaint on this matter and proposed means by which redress could be made under the regulations.  You have given no reasons to show that you consider the Appointed Person’s decision is wrong, and the Secretary of State has seen no evidence to lead him to a different conclusion from that reached by the Appointed Person.  In his view, the Appointed Person’s proposal offers sufficient redress for the loss you suffered as a result of the council’s failure of administration.

 

11.  The Secretary of State has next considered the benefits paid to you on your cessation of employment on redundancy grounds.  With the exception of the matter of your additional contributions, the Secretary of State has seen no evidence to lead him to conclude that the council have incorrectly assessed your LGPS benefits or failed to put them into payment as required under regulation 26.  The Secretary of State notes that your complaint is over the award of “compensatory added years”, which you consider have been calculated under a policy which was improperly or unfairly introduced and implemented.  You maintain that the council should have used their discretion to make a higher award.  The Secretary of State finds from the evidence that your award was an award of a credited period under the Discretionary Payments regulations, not augmentation under regulation 52 or added years purchased under regulation 55 of the 1997 regulations.  The Discretionary Payments regulations do not form part of the statutory provisions of the LGPS, and compensation payments under them do not constitute an LGPS pension.  Such payments are not made from LGPS funds to which scheme members contribute.  As the Discretionary Payments regulations are not part of the scheme as defined in Schedule 1 to the 1997 regulations, your disagreement is not about a matter in relation to the scheme and the powers of appeal in regulation 100 and 102 do not apply.  The Secretary of State notes that the separate powers of appeal in the Discretionary Payments regulations do not provide for an appeal in respect of a credited period awarded under regulation 8.  The Secretary of State accordingly concludes that you have no power of appeal to him in relation to your “compensatory added years” and he has no power to determine your complaint.

 

12.  The Secretary of State notes that you are concerned about the way the council introduced their policy to deal with certain discretions available to them.  He notes that on 16 February 1998 the Policy and Resources Committee considered a report from the Chief Executive containing recommendations on the exercise of discretions and on resolutions required under the 1997 regulations. The Secretary of State notes that the regulations do not require scheme employers or administering authorities to consult scheme members in formulating their policy on discretions.  The Secretary of State takes the view that the question of any consultation between an employer and its employees or their representatives, insofar as it may relate to their terms and conditions of service, is a wider employment issue and it is not a matter which falls under the LGPS or to be resolved on appeal.  It further appears to the Secretary of State that your concerns relate primarily to the council’s policy on their powers to make discretionary awards under the Discretionary Payments regulations, adopted at the meeting of the Policy and Resources Committee on 13 July 1998.  These concerns are not about a matter in relation to the scheme and the Secretary of State has no power to consider them on appeal.