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 7 April 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 Ms XXX, the Appointed Person in relation to your local government pension scheme (LGPS) dispute with XXX Fund (the fund).

2.                  The Appointed Person upheld the fund ’s decision on your request for a transfer of benefits from the Teachers Pension Scheme (TPS) to the LGPS.  The fund ’s decision was that a transfer would credit you with a membership period of 22 years 64 days in the LGPS.  You maintain that the fund should credit you with a period of membership obtainable from a club terms transfer and that it was due to their maladministration that you failed to obtain these terms.  Mr XXX, of the Pensions Advisory Service (OPAS), argued on your behalf for the Secretary of State to use discretionary powers in the regulations to allow a club transfer.

3.                  The question for decision: The question for decision by the Secretary of State is whether the fund should accept the transfer value payment from the TPS in respect of your service between 3 July 1967 and 31 December 1994 as a club transfer.

4.                  Secretary of State’s decision: The Secretary of State has taken into account the appropriate regulations.  He finds that the fund are not required to accept a transfer from the TPS on club terms.  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.

5.                  The Secretary of State therefore dismisses your appeal and his decision confirms that made by the Appointed Person.

6.                  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 or enter into further correspondence with you.  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 Secretary of State notes that the OPAS have been assisting you.  You are aware that they assist members and beneficiaries in connection with difficulties which they have failed to resolve.

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).

SECRETARY OF STATE’S POWERS

1.         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.  Like the Appointed Person, the Secretary of State will not under the 1997 regulations overturn a decision where the fund have exercised a discretion.  His role is, rather, to ensure that the discretion has not been exercised unreasonably, improperly and, in cases where it has, to determine that the matter should be reconsidered in a proper manner.  There are no provisions to award compensation where claims are made that incorrect or inadequate information has been provided with regard to the LGPS even where it is shown that maladministration has taken place leading to financial loss or injustice.  Like the Appointed Person the Secretary of State has no powers to direct a local authority to act outside the provisions of the regulations.

 

EVIDENCE RECEIVED

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

a)                  from you: letters dated   5 April (with enclosures) and 26 May 2000;

b)                  from Mr XXX (OPAS): letter dated 7 April 2000; and

c)                   from the Appointed Person: letter dated 12 May 2000 (with the enclosures copied to you with the Department’s letter of 19 May).

REGULATIONS CONSIDERED AND REASONS FOR DECISION

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

a)                   your date of birth is 7 September 1944;

b)                  you were a member of the TPS from 3 July 1967 until 31 December 1994 accruing 27 years 149 days service;

c)                   on 25 November 1994 you completed a form referenced FORM STA 100 provided by the fund indicating that you were interested in having your pension rights transferred to the LGPS;

d)                  on 1 January 1995 you started new employment as a member of the LGPS;

e)                   on 8 June 1995 the fund sent you their calculation of the period of service (referred to under the 1997 regulations as a period of membership) that a transfer of your TPS pension would buy in the LGPS, amounting to 34 years 242 days;

f)                    on 15 August 1995 you gave notice to the fund agreeing to the terms offered;

g)                   on 21 August 1995 the fund replied that the membership period in the initial calculation was incorrect and that the period of membership you would be credited with was 26 years 201 days;

h)                   on 28 September 1995 you wrote to the fund electing not to transfer your TPS rights to the LGPS saying that you believed such a decision was not irrevocable and that you could review the position and make a final decision within 12 months of your retirement;

i)                     on 11 October 1995 the fund replied saying that “ … should you wish to investigate the transfer at a later date various factors used in the calculation process may mean that the amount of service credit available may be considerably lower than the current value … ”;

j)                    on 8 March 1999 you wrote to the fund asking them to arrange a transfer; and

k)                  on 27 August 1999 the fund offered you a transfer value of your benefits from the TPS that would buy 22 years 64 days membership in the LGPS.

4.                  You appealed to the Appointed Person against the fund’s decision claiming “ … two separate but linked maladministrations … ” where the fund failed to give you adequate information to enable you to make informed decisions about your pension rights.  Both instances were in 1995: the first instance was when you received an incorrect transfer valuation and the second was when you received confirmation of your election without being informed of the 12 month time limit for club transfers although you claim you did not become aware of this time limit until after you received the fund’s decision of 27 August 1999.

5.                  The Appointed Person considered your appeal as two complaints of maladministration.  On the first complaint (described by the Appointed Person as an incident that took place in 1995) he found that it could not be considered under the Internal Disputes Resolution Procedure, as an appeal must be made within 6 months of the relevant date.  He did have the option to consider a longer period than 6 months but concluded that “ … a longer period should not apply in this case … ” and decided this part of your appeal was out of time.  On the second complaint he found the service credit quoted in the fund’s letter of 27 August 1999 correctly reflected the requirements of regulation 121 of the 1997 regulations.

6.                  You contend that the Appointed Person’s decision was made on technical grounds that were flawed and did not address the issue of fairness.  You particularly request the Secretary of State to look at your contention that;

a)                   your decision in 1995 not to transfer your benefits from the TPS was taken after you had already received incorrect information from the fund and so you did not trust the fund’s ability to deal with your circumstances; and

b)                  the transfer value being offered discounted one year of your teaching service.

On your behalf Mr XXX argued that the first transfer episode was not good practice, that it could not be divorced from when you were “ … not specifically made aware of the consequences of not transferring on a club basis … ”.  He contended that discretion could be used to extend the 12 month limit on club transfers because the technicalities of a club transfer were not adequately communicated, there were other cases of similar circumstances where this was done and your long public service should be considered as a factor.

7.                  The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply.  When you joined the LGPS (then known as the local government superannuation scheme) the 1986 regulations applied.  Regulation J8 provided for inward transfers to the LGPS within the overriding provisions of Pensions Schemes Act 1993.  The Act contains overriding provisions covering transfers between occupational pension schemes to which the TPS is also subject.  If, within 12 months from the date a person became a pensionable employee (a member of the LGPS) they made a written request for a transfer of previously accrued pension rights into an LGPS fund, fund administrators such as the fund were required to accept a transfer.  Otherwise it was for the fund administrators to decide whether to accept a request (regulation J8(1) and (2)).  Regulation J9 and Schedule 17 provided for the calculation of a service credit.  Paragraph 2(a) of Schedule 17 gave broadly equivalent service where the transfer was between club schemes (such as the TPS) but only if the application was made within 12 months of joining the new scheme.  In any other case the period of membership was calculated on a non-club basis (paragraph 2(b) of Schedule 17) by reference to Schedule 16 which is also used for calculating outward transfers.  On 2 May 1995 the 1986 regulations were replaced by the 1995 regulations.  These contained similar provisions for transfers into the LGPS (regulations K13 to K16).  On 1 April 1998 the 1997 regulations replaced the 1995 regulations and again contained provisions for transfers of pension rights into the LGPS similar to those in the 1986 and 1995 regulations (regulations 121 to 123).

8.                  The Secretary of State has considered the representations and evidence submitted.  He has first considered whether any part of your appeal was out of time.  Under regulation 100(8) of the 1997 regulations an application to appeal must be made within 6 months of the relevant date or longer if the Appointed Person considers this reasonable.  The Secretary of State notes that you are not alleging maladministration solely in the context of the fund’s offer of a service credit on non-club transfer terms under regulation 122(3) of the 1997 regulations.  Rather you contend that you should be offered a credit transfer calculated on club transfer terms because of what you claim is maladministration in the way you were informed of your transfer rights in 1995.  The Secretary of State notes that the Appointed Person regarded your first complaint of maladministration in 1995 as out of time.  The Secretary of State does not dissent from this view.  He recognises that your dispute about the fund’s offer of a transfer on non-club terms in 1999 is linked to your allegations of maladministration in 1995, and he notes your claim that you did not realise the significance of your decision on 28 September 1995 until receiving the fund’s letter on 27 August 1999 informing you of your reduced entitlement to a transfer.  The Secretary of State notes, however, that although you were initially given wrong advice of the service credit calculation in 1995, the fund subsequently advised you of the correct calculation in time for you to make a decision whether or not to transfer you benefits within one year of joining the scheme.  You made the decision not to transfer, having taken external advice, within the 12 month period.  The Secretary of State considers that you were aware of the fund’s mistake and the correct calculation, and had time to challenge, dispute or lodge a complaint about the fund’s advice and handling of your case at the time.  He therefore sees no reason to extend the time limit for considering that claim of maladministration.

9.         In considering your appeal that the fund should now offer you a transfer on club terms, the Secretary of State notes that Mr XXX asked him to exercise discretion to allow a transfer on club terms, and asked that factors such as your service record should be considered.  The Secretary of State takes the view that where the regulations provide for fund to exercise their discretion, he can require them on appeal to reconsider their decision if he considers it has been shown that it was not reasonable or proper, but he cannot overturn it and substitute his own decision instead.

10.       The Secretary of State takes the view that your decision not to transfer your TPS pension rights was valid.  It was taken in the knowledge of the service credit that a transfer value would buy, and a clear warning was given to you, before the twelve months was up, that a later election to transfer could result in a significantly lower service credit.  In the light of this warning, the Secretary of State does not regard the fund’s lack of reference to the club terms or to the twelve month period as such a crucial failure of maladministration as to invalidate your decision not to transfer your benefits.  The condition in regulation J8(1) of the 1986 regulations, for a transfer, requiring written notice from you within 12 months of joining the Scheme, was not satisfied, but the fund  agreed to accept a transfer more than 4 years after you joined the Scheme.  Since you did not make an election for a transfer of pension rights from the TPS within 12 months the club transfer arrangements of Schedule 17 did not apply to you.  The transfer value and resultant membership credit therefore fell to be calculated in a manner similar to a transfer out of the LGPS under regulation J2 and Schedule 16.  While you may not have been aware of the detail of the provisions, the Secretary of State is satisfied that you should, from the earlier warning, reasonably have expected a significantly lower service credit than that offered in 1995.  In the Secretary of State view the fund’s decision to accept a transfer on non-club terms is neither improper not unreasonable and he does not consider that any maladministration by the fund has caused you financial loss or injustice.