808 INDEX
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (the 1986 regulations)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)
1. I refer to your letter of 25 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 Council (the council).
2. The Appointed Person decided that the council’s statutory notification of 13 May 1991 wrongly indicated your transferred-in membership period in the LGPS but that this was not binding on the pension scheme. You contend you should be awarded restitution for the financial insecurity occasioned by the council’s maladministration.
3. The question for decision: The questions for decision by the Secretary of State are whether the council are guilty of maladministration which has caused you financial loss or injustice, and whether the council can award you additional years in restitution.
4. Secretary of State’s decision: The Secretary of State finds that there is clear evidence of maladministration by the council which may have caused you financial loss or injustice. However, there are no provisions in the regulations for him to direct the council to award additional membership nor does he have the power to award compensation.
5. The Secretary of State upholds your appeal in part but is unable to order redress or award compensation. His decision replaces that made by the Appointed Person.
6. 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.
7. 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 further or enter into further correspondence with you about the decision. 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 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 misleading or 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.
2. The following evidence has been received and taken into account:
(a) from you: letters dated 25 April (with enclosures) and 7 June 2000; and
(b) from the Appointed Person: letters dated 24 May (with the enclosures copied to you with the Department’s letter of 31 May) and 3 July 2000 (copied to you on 10 July).
3. From the evidence submitted the following relevant points have been noted:
(a) your date of birth is 14 November 1948;
(b) from 1 October 1973 to 30 June 1981 you were in non-LGPS pensionable employment with XXX and Associates (XXX);
(c) from 6 July 1981 to 2 September 1990 you were in pensionable employment with XXX Council (the regional council) transferring your pensionable service with XXX into what was the local government superannuation scheme for Scotland;
(d) your pensionable service with XXX purchased 2 years 90 days membership period in the local government superannuation scheme for Scotland;
(e) on 3 September 1990 you commenced LGPS pensionable employment with the council transferring membership period accrued in your previous employment to the council;
(f) the council issued you with a statutory notification dated 13 May 1991 presenting your XXX membership period as calendar length rather than its equivalent value in the LGPS; and
(g) the council issued a further statutory notification dated 1999 which showed a much reduced period in respect of your XXX membership.
4. You appealed against the council’s decision that they were not bound by the statutory notification of 13 May 1991 because you cannot accrue a period of membership before you retire that would recover the position indicated by the notification in that you had a potential to accrue a greater membership period. You said you were advised “to buy back pension” but you felt that having made financial commitments based on the notification you could not afford to do so.
5. The Appointed Person found that the statutory notification of 13 May 1991 was wrong and that the notification was not binding on the council. He referred to a “discretion to add “added years” ” as set out in regulation 52 of the 1997 regulations and that the council considered exercising such a discretion. He found that this was only available on termination of membership between the age of 50 and 64. However, he agreed with “the Scheme Manager’s assessment that the addition of all the years you seek (5+) are not a reasonable response to the mistake”. He directed that once you were legally entitled to make a further request, “the Local Authority should re-consider that request” exercising their discretion “in accordance with the Council’s guidance”.
6. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. At the time you started working for the council the 1986 regulations provided for pensionable service entitlement (membership period) under the LGPS. The council was required to make certain decisions about the status of an employee (regulation N3). These decisions had to be made within three months of them starting employment and again as soon as practicable after any material changes in their employment. Regulation N3 also required them to make decisions about membership period. Regulation N7 required them to notify the member of those decisions in writing as soon as reasonably practicable.
7. Regulation 52 of the 1997 regulations gives employers the discretion to resolve to increase the total membership of a member, who leaves employment at or after age 50, by up to 6 2/3 years. The 1997 regulations require an LGPS employer 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 regulation 52.
8. The Secretary of State has considered all the evidence. It is not disputed that a statutory notification dated 13 May 1991 gave an incorrect membership period for your employment with XXX as calendar length rather than its equivalent value in the LGPS and that the council are not bound to apply the membership period for your pensionable service with XXX. The Secretary of State noted that the council provided a copy of a notification, dated 13 January 1982 addressed to you by your previous employer, of decisions they made in connection with your pension arrangements. This notification gave “Details of Previous Service” and under the column heading Employing Authority it stated - XXX “(Equivalent to 2 years 90 days)”. The Secretary of State notes that you do not recall receiving it. He takes the view that it cannot now be proved whether you did or not but he notes in any case that the columns for reckonable and qualifying service were not filled in, and he does not consider the manuscript wording “Equivalent to 2 years 90 days”, without further explanation to be particularly clear or revealing to a layman. He notes that in 1998 you received an indication of your membership entitlement when your benefits were estimated for the purpose of early retirement as a result of a proposed redundancy. It is clear you regarded this as wrong but did not pursue it when redundancy was no longer in prospect.
9. It is clear the council were required by regulation N3 of the 1986 regulations to make decisions about your membership period and regulation N7 required them to notify you of those decisions in writing as soon as reasonably practicable. He notes that the council contend that the “statement itself recognises that mistakes can be made and the member is specifically asked to check the accuracy”. The Secretary of State notes the details of the interfund adjustment provided to the council by the regional council on 10 December 1990 and he finds this quite clear as to the reckonable service provided by your XXX service. He therefore finds no obvious mitigating circumstances for the council’s error in the notification dated 13 May 1991. On balance the Secretary of State does not find there is clear evidence to persuade him that you should have concluded that the statement was wrong. It further appears that the council were aware in 1993 that it was wrong but failed to inform you. The Secretary of State regards the council’s mistake and failure subsequently to inform you of it until 1999 as a clear case of maladministration.
10. The Secretary of State notes that you contend that you planned your finances on the basis of the statutory notice of 13 May 1991 and that you face financial detriment when you retire unless you buy added years. He accepts that the notification may have raised your expectations, though you do not provide any objective evidence that any financial decisions you made were made with reference to your potential pension entitlement. He takes the view that you could now buy added years but recognises this could cause you additional expense compared to the cost of commencing the purchase of added years from an earlier date. He concludes there is some reason to assume therefore that the council’s maladministration may have caused you financial loss or injustice. However, the LGPS regulations do not provide for compensation to be paid where maladministration occurs. Nor can the Secretary of State require the council to augment your membership under regulation 52 of the 1997 regulations. Augmentation only becomes available as a discretionary power to the council one month before you cease employment, and even then the amount they can award would be circumscribed. They could not make any award, for example, that would increase your membership beyond that which you are entitled to at your normal retirement date.