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Our Ref: LGR 85/18/303 804 INDEX
8 September 2000 |
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (the 1995 regulations)
LOCAL GOVERNMENT PENSION SCHEME (Transitional Provisions) REGULATIONS 1997
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)
1. I refer to your letter dated 16 May in which you appeal (under regulation 102 of the 1997 regulations) against the decision of Mr XXX, the Appointed Person for XXX (XXX), in relation to your local government pension scheme (LGPS) dispute with the XXX.
2. The Appointed Person, in his decision dated 30 April 2000, upheld the XXX’s decision that they could not accept a restitution payment made by the Legal and General on your behalf.
3. The question for decision: The questions for decision by the Secretary of State are whether the XXX should have accepted a restitution payment for your LGPS membership from the Legal and General Assurance Society, and whether you have suffered financial loss or injustice as a result of maladministration by XXX.
4. Secretary of State’s decision: The Secretary of State has decided that the XXX could not accept the restitution payment offered by the Legal and General Assurance Society in respect of your pension rights accrued in the LGPS from 1974 to 1989. He also finds that, on the face of it, you may have suffered financial loss or injustice as a result of maladministration by XXX. However, even where this is shown to be the case, he has no power to award compensation.
5. The Secretary of State therefore dismisses your appeal. His decision confirms that made by the Appointed Person.
6. 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 his decision.
7. The Secretary of State is acting judicially and has no power 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.
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 they have failed to resolve. Their address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0207 233 8080).
9. 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 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 statutory provisions governing the LGPS have been correctly applied in the circumstances. The disagreement you referred to the Appointed Person was whether the XXX should have accepted the restitution payment from Legal and General, to be made on your behalf, in respect of LGPS service between 1974 and 1989.
2. The Secretary of State has considered all the representations and evidence, and has taken into account the appropriate regulations.
EVIDENCE RECEIVED
3. The following evidence has been received and taken into account:
a) from you: letters dated 16 May 2000 (with enclosures) and 20 July 2000 (with enclosures); and
b) from the Appointed Person: letters dated 4 July 2000 (with the enclosures copied to you with the Department’s letter of 11 July 2000) and 27 July 2000 (a copy of which was sent to you under cover of the Department’s letter dated 31 July 2000).
REGULATIONS CONSIDERED AND REASONS FOR DECISION
4. From the evidence submitted the following relevant points have been noted:
a) Between 1974 and 1989 you were an active member of the LGPS;
b) You left employment on 23 October 1989 with deferred benefits;
c) In 1992 you transferred your preserved benefits in the LGPS to a personal pension plan with Legal and General;
d) You restarted local government employment in 1993 and gained a permanent contract in September 1995 and rejoined the LGPS;
e) On 21 February 1997 you requested to transfer your personal pension held with Legal and General, back into the LGPS;
f) On 10 September 1998, Legal and General made you an offer of redress in respect of the advice you received regarding transferring your occupational pension scheme benefits. This offer was conditional on you signing a waver against taking further action in respect of your pension benefits;
g) You signed this waver on 25 September 1998;
h) On 10 November 1998, XXX wrote a letter to Legal and General confirming the cost of reinstatement;
i) On 8 December 1998 Legal and General wrote to you stating that they were now in a position to reinstate your benefits into the LGPS;
j) On 16 November 1999, the XXX wrote to Legal and General, explaining that the LGPS regulations would not allow the reinstatement of your service between 7 March 1974 and 23 October 1989.
5. You contend that the XXX have dealt with your case badly, and that their poor administration led your hopes to be raised and then dashed in regard to the value of your pension. You also contend that you signed away your ability to pursue the matter by other means with Legal and General, because of the information given by the XXX to Legal and General.
6. In a letter dated 10 January 2000, the XXX wrote to Legal and General and apologised for causing confusion by incorrectly supplying a reinstatement cost. They also explained that, in this particular case, because you had actually left employment and subsequently transferred your service out of the scheme, you are not eligible to have the period reinstated.
7. The Appointed Person stated in his determination that ‘as you were not eligible to be an active member of the LGPS between October 1989 and September 1994 because you were not employed in eligible local authority employment during that period you could not have opted-out of membership of that Scheme. You therefore fall outside the statutory regulations governing the restitution of LGPS pension rights for a local authority employee who was persuaded to opt-out of the Scheme in favour of a mis-sold personal pension. Consequently your reckonable LGPS service for the period form 1974 to 1989 cannot be reinstated by means of a capital payment made by the Legal and General Assurance Society under the regulations made to protect the position of those employees who did opt-out of membership of their employer’s pension scheme.’
8. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. You requested that your personal pension be transferred back into the LGPS in February 1997. The statutory basis for the re-instatement of mis-selling victims in the LGPS was contained in the Local Government Pension Scheme (Provision of Information, Administrative Expenses and Restitution) Regulations 1997. This amended the 1995 regulations, and came into force on 9 April 1997. Under Regulation KI5A(1), the restitution arrangements in the LGPS applied to any person who was eligible to be a member of the scheme; who opted out of the scheme under regulation B10(2); was a member of a personal pension scheme, etc, and who suffered a loss as a result of a contravention which is actionable under section 62 of the Financial Services Act 1986.
9. At the time your employer made the decision not to accept a restitution payment on 16 November 1999, the 1997 Regulations and the Transitional Provisions Regulations had come into force (as of 1 April 1998). The new regulations had similar rules in respect of restitution payments, and only applied to eligible employees who opted out of the LGPS to contribute to a personal pension.
Regulation 122A(1) of the 1997 regulations (inserted by paragraph 62(3) of Schedule 3 to the transitional regulations) provides that regulation 122(3) (standard transfer terms) of the 1997 regulations will not apply where –
(a) the transferring person is a person about whom information may be given under section 172(1) of the Pension Act 1995 (mis-sold personal pensions)...
Where paragraph (1) applies, Regulation 122 (3) states that the credited period is the period of membership the transferring person could have counted if he had been an active member throughout the personal pension period. Regulation 122A(6) defines the personal pension period as the period
for which the transferring person was eligible to be an active member but in respect of which he made contributions to the personal pension scheme instead.
Section 172(1) of the Pension Act 1995 applies to persons to which the following applies –
(a) whether an individual who during any period –
(i) has been eligible to be an active member of an occupational pension scheme under the Superannuation Act 1972, but
(ii) has instead made contributions to a personal pension scheme,
has suffered loss as a result of a loss.....
10. The Secretary of State has considered the regulations. He finds, like the Appointed Person, that you were not eligible to be an active member of the LGPS between October 1989 and September 1994, and that, consequently, you did not opt out of membership in 1992 when you transferred your deferred LGPS benefits into a personal pension with Legal and General. The regulations governing the restitution of LGPS pension rights for local authority employees who were persuaded to opt-out of the Scheme in favour of a mis-sold personal pension do not, therefore, apply to your case. He notes that you do not dispute that Scheme rules have been applied correctly in your case, and that your complaint is one of maladministration.
11. The Secretary of State notes your contention that the XXX mistakenly supplied a quote on 10 November 1998, and that this led you and the Legal and General to expect a restitution transfer to be allowed. He also notes your contention that you signed away any further claims against the insurance company because of the information provided to them by the XXX. The Secretary of State notes that the XXX accept that the reinstatement quotation was based upon the mistaken assumption that you had opted out of the LGPS in 1990 and not actually left. However, he notes that the evidence regarding your contention that the XXX’s error led to your signing a legal waiver for the Legal and General is neither confirmed (nor refuted) by the evidence available to him: the earliest piece of evidence he has of the quote supplied in error is in a letter dated 10 November 1998, whilst you signed the waver before this, on 25 September 1998. Whilst the Secretary of State accepts, therefore, that the XXX’s administrative error led you to believe the restitution payment would be accepted, it has not been shown conclusively that the XXX’s mistake led to your signing the legal waiver which is apparently preventing you from resolving this matter with Legal and General. However, any question regarding the validity of this waiver is a matter for Legal and General, not for the Secretary of State. Regardless of this, The Secretary of State accepts your complaint that the XXX’s error which led you to understand that reinstatement was possible may on the face it amount to maladministration which has caused you financial loss or injustice. However, he has no powers to award compensation even where it is shown that maladministration has taken place causing 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, and there is no form of redress he can offer in this case.