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Our Ref: LGR 85/18/278 5 June 2000 767 INDEX |
SUPERANNUATION ACT 1972
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 21 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 upheld the council’s decision that you were not entitled to a refund of contributions. You maintain that if the council had properly informed you of your LGPS entitlements when you commenced employment you would not have elected to join the LGPS.
3. 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 information has not 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.
4. The question for decision: The questions for decision by the Secretary of State are whether -
a) you were entitled to a return of contributions when you ceased employment with the council on 31 December 1998; and
b) the council were guilty of maladministration by failing to supply proper and timely information about the Scheme.
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 7 April 2000.
6. Secretary of State’s decision: The Secretary of State has taken into account the appropriate regulations. He finds that you are not entitled to a return of contributions. However, he is not satisfied that the council properly informed you of your pension entitlements when you first joined the LGPS and subsequently. However, he has no power to award compensation even where it is shown that maladministration has occurred leading to financial loss or injustice, and he is unable to order any redress in your case.
7. The Secretary of State’s decision replaces that made by the Appointed Person. 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.
8. 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).
9. 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).
1. The following evidence has been received and taken into account:
(a) from you: letter dated 21 January 2000 (with enclosures); and
(b) from the Appointed Person: letter dated 3 April 2000 (with the enclosures copied to you with the Department’s letter of 7 April).
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
(a) in April 1996 you started employment with the council as a temporary part-time employee;
(b) on 5 August 1996 you became a pensionable employee with the council in a full-time temporary post;
(c) on 10 November 1996 you ceased employment;
(d) on 2 December 1996 you started a permanent post with the council;
(e) on 10 December 1996 you received a refund of contributions for the period 5 August to 10 November 1996;
(f) on 7 April 1997 you elected to join the LGPS and to back date your membership;
(g) you repaid the refunded contributions and paid contributions for the period 2 December 1996 to 30 April 1997;
(h) on 31 December 1998 you ceased employment with the council; you had accrued 2 years 128 days membership; and
(i) on 12 November 1999 the council sent you notice of your deferred benefit entitlement.
3. After ceasing employment on 31 December 1998 you requested a return of contributions from the council who refused on the grounds that your LGPS membership was more than two years. You appealed to the Appointed Person under regulation 100 of the 1997 regulations against this decision on the grounds that you were not informed on joining the LGPS that you may not be eligible for a refund of contributions after two years membership, and that if you had known this you would not have joined the LGPS. You contend that you did not receive any other information about the Scheme until sometime in September and October 1998.
4. The Appointed Person explained in his letter of 16 September 1999 that his decision was whether the regulations had been properly applied. The Secretary of State notes he did not deal with the issues you raised over the provision of information and, although he may not have been able to offer redress, he did not consider whether the Scheme rules covered the provision of information. He concluded that, “within the regulations you are not entitled to the refund which you ask.” However, he also found that your decision to rejoin the LGPS was in the long term “of measurable benefit to you.”
5. The Secretary of State notes that the Appointed Person failed to include in his decision letter a reference to regulatory provisions relied on or to your right of appeal to the Secretary of State as required by regulation 101(3)(b) and (d) of the 1997 regulations. Although he later put the latter omission right his decision was deficient in that respect.
6. In your appeal to the Secretary of State you allege that the council’s failure amounts to maladministration. You contend that in addition to their failure to convey “any information … about the pension scheme or [its] regulations” in August 1996, December 1996 and April 1997, they subsequently failed to clarify the dates used to calculate “the inception of” your pension contributions.
7. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. When you took up full-time temporary work with the council on 5 August 1996 the 1995 regulations applied. Under regulation B10, employees other than casuals were generally deemed to have applied to join the LGPS unless they opted out by giving written notice. A member could leave the scheme at any time by giving written notice (regulation B12) and could subsequently elect to re-join (regulation B13). A person who re-joined local government with previous membership in the scheme was not deemed to have applied for membership if he had left the scheme during his previous employment or gave advance notice that he did not wish to join.
8. A member is entitled to a return of contributions only if he left the scheme with less than 2 years’ membership and did not re-join it within one month and one day (regulation C21 of the 1995 regulations and regulation 87 of the 1997 regulations).
9. Employers were required to make certain decisions (regulation J2(1)) about the status of members who had joined the scheme and (regulation J3) about their benefits. Regulation J4 required them to notify the member of those decisions in writing as soon as reasonably practicable. Similar provisions are contained in the 1997 regulations which replaced the 1995 regulations in respect of active members on 1 April 1998.
10. The Secretary of State has considered all the evidence. The effect of the regulations in your case is that you are not entitled to a return of contributions following cessation of employment on 31 December 1998. It appears that following the Appointed Person’s decision you no longer dispute this but believe you have been the victim of maladministration because the council failed to provide information on LGPS rules and entitlements. The Secretary of State has therefore considered whether the council were required under the rules governing the LGPS to inform you of rights available under the LGPS when you became an employee or when you became a member and whether there is sufficient evidence from which it would be reasonable to conclude that you were not so informed. The Secretary of State takes the view that the Occupational Pensions Scheme (Disclosure of Information) Regulations 1996, to which the LGPS was subject, required your employer to inform you when you became eligible to join. Part J of the 1995 regulations required the council to decide on your pensionable status and inform you of their decision when you entered employment. The Secretary of State notes that in your letter to the Pensions Ombudsman of 24 February 1999 you say you first became aware that you were participating in a pension scheme in November 1996 when you noticed the council were deducting contributions from your salary. You say you did not seek information on the LGPS at that time because you were leaving your job with the council (although you were seeking another post with the council). In April 1997, after seeing a booklet about the LGPS circulated by the council, you sought to rejoin. The Secretary of State notes that while the council did provide information on your entitlements at various times there is no conclusive evidence to show whether you received any information until 10 December 1996 when you were sent a cheque for a return of contributions, although the council’s covering letter refers to your request for a return of contributions which indicates that there was previously some exchange of information and that you were aware of your entitlement to a return of contributions. The Secretary of State notes there was an attachment to the covering letter explaining the terms used in the letter and it advised you to seek further explanation from the council. However, although you may have been aware of an entitlement to a return of contributions this does not show you were aware of the qualifying criteria. The Secretary of State notes that you received notice from the council in a letter to you dated 30 June 1997 that you were a “Pensionable Employee”, that you were “entitled to participate in the Benefits of the Council’s Pension Fund from 2 December 1996” and that you had previous service from 5 August to 10 November 1996 of 98 days. He further notes that the council claims that it is their practice to send a booklet explaining the LGPS with a package sent to new employees. They do not state when this practice was first established nor do they say if any measures were taken to ensure a member had received such information and there is nothing in the council’s letter of 30 June 1997 referring you to any explanatory literature.
11. The Secretary of State considers it has not conclusively been shown whether when you first became an LGPS member the council notified you of your rights as required under regulation J4 of the 1995 regulations, although you do not indicate or provide evidence as to why you might not have received the information. He considers that the council’s letter to you dated 11 March 1999 does suggest that the council accept that, exceptionally, you may not have received the relevant information. He notes that after you re-joined the LGPS the council sent written confirmation of the date you commenced paying contributions and the membership period purchased by the repayment of the returned contributions with relevant dates (their letter of 30 June 1997).
12. The Secretary of State concludes that the council were required to give you sufficient and timely information about the Scheme to enable you to make informed decisions. There is no clear evidence that they did so and from the representations and papers submitted the Secretary of State thinks, on balance, that the probability is that they did not do so. He accepts that this failure constitutes maladministration.
13. Because the 1995 regulations and 1997 regulations do not permit a return of contributions in your circumstances the Secretary of State cannot order redress because you were not properly informed of this entitlement. Nor does he have the power to award compensation where it is shown that a council has failed to provide information with regard to the LGPS or where it is shown that maladministration has taken place leading to financial loss or injustice. He therefore dismisses your appeal.