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Our Ref: LGR85/18/296 6 October 2000 810 INDEX |
LOCAL GOVERNMENT PENSION SCHEME APPEAL
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)
1) I refer to your letter of 20 June 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 for the XXX Pension Fund (the fund), in relation to your Local Government Pension Scheme (LGPS) dispute with the fund.
2) The fund calculated your retirement benefits with enhancement following your retirement on ill-health grounds. You appealed to the Appointed Person that you were being treated less favourably (in the calculation of enhanced membership) because of your part-time service than an employee whose service was all full-time. The Appointed Person found that it was not within his remit to assess whether the LGPS rules discriminate against members of a particular gender. In your appeal to the Secretary of State you also contended that you would have expected the Appointed Person to establish that the regulations were properly applied in your case and whether the fund had any discretion in the application of the regulations.
3) The question for decision: Your original complaint was that the calculation of your service discriminated against you as a part-timer. The Secretary of State has also considered your subsequent question whether the regulations were correctly applied.
4) The Secretary of State’s decision: The Secretary of State takes the view that questions whether the regulations, which are statutory provisions, are discriminatory are not matters he can consider on appeal. He finds that you are entitled to have your benefits calculated on an enhanced membership period of 20 years rather than the 19 years 213 days which the fund have awarded. The Secretary of State’s reasons and the regulatory provisions which he considers apply in your case are set out in the annex to this letter, which forms an integral part of this decision.
5) The Secretary of State therefore upholds your appeal in part and his decision replaces that made by the Appointed Person. 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 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.
6) 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).
7) The Pensions Ombudsman may investigate and determine any complaint of maladministration or 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 020 7834 9144).
8) A copy of this letter has been sent to the Appointed Person and the pensions manager.
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.
2) The following evidence had been received and taken into account:
a) from you: letters dated 22 May and 20 June 2000 with enclosures;
b) from the Appointed Person: letter dated 12 June 2000 with enclosures (copied to you with the Department’s letter of 16 June); and
c) from the fund: letter dated 16 August 2000 with enclosure (copied to you with the Department’s letter of 21 August).
3) From the evidence submitted the following relevant points have been noted:
a) you retired from LGPS employment on ill-health grounds on 8 January 2000 with an entitlement to immediate payment of enhanced LGPS benefits;
b) you were a contributing member with whole-time service from 1989 until your retirement and a mix of whole and part-time service between 1986 and 1989;
c) on retirement you had more than 10 years but less than 13 122/365 years whole-time membership;
d) your whole-time and whole time equivalent membership (“total membership”) amounts to 12 years and 335 days;
e) your calendar length of membership amounts to more than 13 122/365 years; and
f) the fund awarded you an enhanced membership period of 19 years 213 days.
4) You appealed to the Appointed Person that you were being treated less favourably because of your part-time service than an employee whose service was all full-time. You contend that a full-time employee with your full-time contributory service of 10 years and 189 days, who retired on ill-health retirement, would have their service enhanced to 20 years, as would a full-time employee with your whole-time equivalent service of 12 years and 335 days. You maintain that the calculation of your enhanced membership resulted in discrimination against you as a part-time employee and that as most part-time employees are women, this represents sex discrimination against you.
5) The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. When you were awarded payment of your retirement benefits with enhancement on ill-health grounds the 1997 regulations applied. A member is entitled to immediate payment of retirement benefits on ill-health grounds under the terms of regulation 27. Where a member’s total membership is at least 5 years, retirement benefits paid under regulation 27 are calculated by reference to his enhanced membership period rather than his total membership. Calculation of the enhanced membership period is provided for under regulation 28.
6) There is no dispute that you ceased local government employment on ill-health grounds with an entitlement to immediate payment of enhanced LGPS benefits (regulations 27 and 28 of the 1997 regulations). Regulation 28(2) of the 1997 regulations sets out the enhanced membership period a member is entitled to. The enhanced membership period is, effectively, the member’s total membership plus a (variable) enhancement. The enhanced membership period awarded depends on the total (unenhanced) membership, which is divided into three broad bands. These are 5 – 10 years (enhanced membership is double total membership), 10 – 13 122/365 years (enhanced membership is 20 years), and over 13 122/365 years (enhanced membership is total membership plus 6 243/365 years). The effect on the middle band is that the enhancement will vary according to total membership, but the enhanced membership period remains constant at 20 years. The effect on the top band is that the enhancement is constant but the enhanced membership period increases with longer total membership. The provision also has the clear effect that the enhanced membership period for any particular band of total membership cannot be less than the enhanced membership period for a band of shorter total membership.
7) Further provisions in regulations 28 provide for a member who has both whole-time and part-time membership. Where a member has periods of part-time membership the enhanced membership period is calculated as if his employment had all been whole-time, and is then reduced pro rata. This is set out in regulation 28(5) and (6) which provides that the enhanced membership period must first be calculated on calendar length of membership and the resultant period is then reduced by the appropriate fraction. The “appropriate fraction” is the proportion of total membership to calendar length membership. The Secretary of State notes that the “resultant period” is, in effect, a calendar length equivalent enhanced membership period. In your case the fund have mistakenly reduced the enhancement (the difference between total membership and enhanced membership) instead.
8) The Secretary of State notes that your whole-time membership is less than 13 122/365 years, although your calendar length membership, (that is your combined membership, treating your part-time membership as if it were whole-time) is more than this period. You do, however, have more than 10 years whole-time membership, which without taking into account your part-time membership would mean that you would qualify for an enhanced membership period of 20 years. The fund have relied on their calculation under regulation 28(5) without regard to the rest of regulation 28. The effect of their interpretation is to award you a lesser enhanced membership period than that to which you would be entitled under regulation 28(2) in respect of your whole-time membership. Their interpretation thus creates a conflict between the provisions in regulation 28.
9) The Secretary of State recognises that the regulations are not exhaustive, and regulation 28(5) provides a methodology but does not specifically refer to every permutation and combination of whole and part time membership. In particular, it does not specify the precise enhanced membership period where, as in your case, both the aggregate of whole-time and whole-time equivalent (“total) membership, and the whole-time membership on its own, lie in the band between 10 years and 13 122/365 years, and the calendar length of membership lies in the over 13 122/365 years band. In such cases, where the regulations are silent on a specific set of circumstances, and where a particular interpretation would give rise to a potential conflict between the provisions in a regulation, the Secretary of State considers it is important to take account of the intention of the regulation. In the case of ill-health enhancements, where there is a mix of whole and part-time membership, the clear intention is that the part-time membership should be recognised proportionately, by proportionately reducing the enhanced membership which would have been awarded on a purely calendar length basis. However, the Secretary of State believes that it clearly cannot be the intention of the regulation that a member whose whole-time membership has passed the 10 years threshold for an award of an enhanced membership period of 20 years, should have that enhanced membership period reduced below 20 years because he has an additional period of part-time membership. This principle is recognised, for example, for a member who has whole-time membership of at least 13 122/365 years in addition to part-time membership in that the period of part-time membership is ignored for the purpose of calculating the enhanced period (regulation 28(8). It is also recognised by the structure of the enhancements which do not allow the enhanced membership period to drop as total membership increases or when progressing from one total membership band to another. In any case there is a long-established principle that if there were a genuine conflict between the provisions of the regulations in the level of benefits to be awarded, the provision which would give the member the higher level of benefits should take precedence.
10) The Secretary of State accepts there has been some confusion in your case, because the regulations do not specifically spell out how to arrive at the enhanced membership period in your specific combination of circumstances. However, the Secretary of State takes the view that a member who has between 10 years and 13 122/365 years whole-time membership in addition to part-time membership, cannot be treated less beneficially than a member who has between 10 years and 13 122/365 years whole-time membership only.
11) The Secretary of State therefore finds that you are entitled to LGPS benefits calculated on enhanced membership period of 20 years.