801 INDEX
LOCAL GOVERNMENT PENSION SCHEME APPEAL
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)
1. I refer to your letter of 4 May 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 for XXX Council (the council) in relation to your local government pension scheme (LGPS) dispute with the council.
2. The Appointed Person determined the council had correctly calculated your pension entitlement.
3. The question for decision: The question for decision by the Secretary of State is whether the council correctly calculated your pension benefits at the time your employment was terminated on 2 January 2000 on the grounds of permanent ill-health retirement.
4. Secretary of State’s decision: The Secretary of State finds that the council correctly calculated your LGPS pension benefit entitlement as detailed in Mr XXX’s letter dated 12 January 2000. He dismisses your appeal and his decision confirms that made by the Appointed Person.
5. The Secretary of State’s reasons and the regulations he considers apply in this case are set out in the annex to this letter, which forms an integral part of the decision.
6. The Secretary of State is acting judicially and has no powers to modify the way the regulations 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 020 7233 8080).
8. The Pensions Ombudsman may investigate and determine any complaint of maladministration or any dispute of fact or law made or referred in accordance with the Pension Scheme 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 4 May 2000 (with enclosures) and 18 July 2000 (with enclosure); and
b) from the Appointed Person: documents considered by her (list enclosed with the Department’s letter of 6 July 2000).
SECRETARY OF STATE’S POWERS
2. 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 statutory provisions governing the LGPS have been correctly applied in the circumstances. The Secretary of Sate has no powers to direct the council to act outside the provisions of the regulations. Nor does he have any power to award compensation even if it were shown that maladministration had occurred resulting in financial loss or injustice.
REGULATIONS CONSIDERED AND REASONS FOR DECISION
3. From the evidence submitted the following points have been noted:
a) you were employed by the council from 28 January 1991;
b) you were a member of the LGPS;
c) you transferred your pension benefits from your previous employment into the LGPS on 7 June 1993, the value of the transfer was equivalent to 1 128/365 years membership of the LGPS;
d) you elected to buy added years in 1998, and with effect from 23 November 1998 you paid an additional 9% of your salary on a monthly basis with the final payment due to be paid on 22 November 2012;
e) your employment was terminated on 2 January 2000 on the grounds of ill-health retirement; and
f) you appealed to the Appointed Person against the councils’ calculation of your LGPS pension benefits.
4. You express concern that the council’s Appointed Person did not find in your favour and request that an independent person determines whether the council has correctly assessed your pension benefits.
5. The Appointed Person determined that “ I am afraid, that after much consideration, I must agree with the assessment of your pension reached by the Council’s Pension Manager and am therefore not able to uphold your appeal.”
6. The Secretary of State in reaching his decision has had regard to the regulations, which, in his view, apply. At the time you ceased employment the 1997 regulations were in force. Regulation 9 of the 1997 regulations explains what must be considered to be “total membership”. This includes (regulation 9(1)(c)) “any period which a member is entitled to count as membership under (i) Chapter II or III of Part III…..”. Chapter III of Part III (regulation 55) provides for the purchase of added years. In other words, added years form part of your total membership and are not an addition to it to be taken into account separately. Therefore, in your case the periods comprising your total membership are:
a) the period for which you were a contributing member of the LGPS, that is 21 January 1991 to 2 January 2000 (regulation 12). The Secretary of State notes that your membership in this respect is 8 340/365 years;
b) the period of membership arising from your previous occupational pension scheme which was transferred into the LGPS in June 1993 (regulations 121 and 122(1)). The Secretary of State notes that your membership in this respect is 1 128/365 years; and
c) the added years which you elected to purchase. The Secretary of State notes that you elected to purchase added years in 1998, paying additional contributions on a monthly basis, and in the normal course of events payment would have ceased on 22 November 2012. However, where a member ceases his employment early because of ill-health and his benefits are paid immediately (under regulation 27) the period of added years is treated as having been paid for (regulation 83(3)). Therefore although you had made additional contributions for only some 14 months, the whole additional period is treated as having been paid for. As such the whole period is a period of total membership (regulation 9). The Secretary of State notes you were purchasing a period of 6 91/365 added years.
7. The Secretary of State has considered regulation 28 of the 1997 regulations, which provides for enhancements in certain circumstances where a member ceases employment due to ill-health and his benefits are paid immediately (under regulation 27) if they have at least 5 years of total membership. For the reasons given above he finds that your total membership is 16 194/365 years. As you have a period of total membership exceeding 5 years you are entitled to an enhancement period under regulation 28. The enhancement period depends on a member’s total membership. Regulation 28 provides that when total membership is more than 13 122/365 years the enhanced membership includes an additional period of 6 243/365 years. This is the additional period to which you are entitled. The Secretary of State calculates that your membership on which your benefits are to be calculated is therefore 23 72/365 years, which corresponds with the council’s calculations as outlined in Mr XXX’s letter of 12 January 2000.
8. The Secretary of State has considered your complaint that you were given a significantly higher estimate of your benefits. The council do not deny this and accept that they misinterpreted the regulations. The regulations do not require the provision of estimates. It appears the error was due not to your particular circumstances or details (which could have changed or been an incomplete or inaccurate basis for calculating an estimate accurately) but because of a misunderstanding about the way to treat added years in calculating an ill-health enhancement. In the Secretary of State’s view this may amount to maladministration. He notes, however, that your employment was terminated, on 2 January 2000, on the grounds that you are permanently incapable of discharging efficiently the duties of your former employment or any other comparable employment with your employing authority because of ill-health or infirmity of mind or body (regulation 27 of the 1997 regulations). He also notes you are therefore entitled to the immediate payment of an ill-health pension and grant. He therefore considers you did not suffer any financial loss or injustice due to the error in the calculation of the estimate of your LGPS pension benefits that was provided to you by Miss XXX in September 1999. This is because you did not make a decision to retire on the basis of the estimate provided; rather, your employment was necessarily terminated on ill-health grounds rather than a matter of choice and you are receiving the benefits due under the requirements of the relevant regulations.
9. The Secretary of State notes that you maintain that the Pension Manager informed you that if your pension benefits had been calculated 4 weeks earlier the estimate provided to you in September 1999 would have been correct. He also notes the Pension Manager disputes he told you this. He is unable to comment on a dispute where there is no objective evidence. He notes there were no changes to the regulations during this period that would have affected the calculation of your LGPS benefits.
10. The Secretary of State concludes that the council correctly calculated your ill-health retirement benefits in respect of your LGPS membership.