817 INDEX
SUPERANNUATION ACT 1972
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 30 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 Mr 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 view that the rules of the LGPS had been correctly applied. These rules permit a member, to count up to a maximum of 40 years membership at 60 plus the value of rights transferred from a non Local Government Scheme if the transfer is received after 2 May 1995. You ask the Secretary of State to give this decision further consideration.
3. The question for decision: The question for the Secretary of State to decide is whether you are entitled to any retained benefits arising because of a period of membership credited from the Principle Civil Service Pension Scheme (PCSPS) and transferred into the LGPS in 1966.
4. Secretary of State’s decision: The Secretary of State has decided that you are entitled to any retained benefits arising because of a period of membership credited from the PCSPS and transferred into the LGPS in 1966.
5. The Secretary of State allows your appeal. 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 information has not 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 Secretary of State has considered all the representations and evidence, and has taken into account the appropriate regulations.
3. The following evidence has been received and taken into account:
(a) from you: letter dated 30 May 2000 (with enclosures); and
(b) from the Appointed Person: letter dated 5 July 2000 (with the enclosures listed in the Department’s letter of 11 July).
4. From the evidence submitted the following relevant points have been noted:
(a) your date of birth is 26 April 1946;
(b) from 3 February 1965 to 30 September 1966 you accrued 1 year 240 days membership period in the PCSPS;
(c) on 3 October 1966 you became a pensionable employee in local government; and
(d) at age sixty the total potential membership you could accrue, including your credited period from the PCSPS, would be more than 40 years.
5. You appealed to the Appointed Person against the fund’s view which was contained in a letter to you dated 29 December 1999 and which stated that “The change to the Scheme rules to permit a member to reckon up to a maximum of 40 years membership at age 60 plus the value of rights transferred from a non Local Government Scheme, is only applicable if the transfer is received on or after 2 May 1995, when Regulation K13 of the 1995 Regulations came into force.”
6. The Appointed Person found that “the Pensions Office of the Inland Revenue … confirmed that they would have no objection to a person in your position being allowed to reckon up to 40 years membership in Local Government plus the value of service transferred in from the Civil Service Pension Scheme, irrespective of when the transfer took place.” He also found that the “requirements of the Local Government Pension Scheme Regulations have been complied with” by the fund and that “these limit the opportunity to take advantage of this flexibility to people who have transferred in from an outside Scheme on or after 2 May 1995.”
7. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. You are an active member of the LGPS, so the 1997 regulations apply to you. The fund is required to calculate your total membership under regulation 9 and excluded membership under regulation 10. Regulation 10(3) refers to the table in schedule 3, which sets out periods of membership that are excluded in certain circumstances:
|
Description of membership |
Purposes for which membership does not count |
Relevant notes |
|
1. A credited
period which is counted as a period of membership under regulation 122(1) or
was counted under any corresponding earlier provision and is counted under
regulation 9(1)(d). |
Calculating total membership for regulation 6(3) and (5) or paragraph 2, 4, 5 or 6(1) of Schedule 4 (and see regulation 15(4)). |
|
Regulations 6(3) and (5) do not appear to be relevant to your case. The paragraphs of schedule 4 referred to in the table under the heading ‘Purposes for which membership does not count,’ impose revenue restrictions that generally limit reckonable LGPS membership to 40 years.
8.
The Secretary of State takes the view that in applying
regulations 9 and 10, paragraph 1 of Schedule 3 is to be taken account in your
case. This refers to transferred-in
membership under regulation 122(1) “or any corresponding earlier
provision”. As a result your total period
of membership includes a period covering ‘retained benefits.’ The Secretary of State does not consider the
date of your transfer into the scheme, or the date of the amendment made to the
1995 regulations, to have any bearing on the question before him. The question before him is whether that part
of your accrued rights which arise as a result of an inward transfer to the
Scheme made in 1966 count as retained benefits. Schedule 3 excludes your retained benefits from being subject to
the 40 year maximum imposed by the LGPS rules.
You will therefore, be entitled to count as reckonable, that membership
which exceeds 40 years, which has been accrued (‘retained benefits’) by the
transfer you made into the Scheme in 1966.
The 1995 regulations came into force
on 2 May 1995. Part D provided for the
calculation of benefits. Regulation K13
provided for arrangements to transfer in rights from non-LGPS pension schemes
and regulation K14 provided for the value of those transferred rights to count
as a period of membership. Schedule C5
provided for limits on benefit entitlements.
With effect from 2 May 1995 regulation 12 of The Local Government
Pension Scheme (Amendment) Regulations 1997 inserted a new paragraph 9A in
Schedule C5. This allowed “the period
of membership used to calculate benefits to exceed 40 years but be subject to
the Inland Revenue maximum for approval where a member has transferred-in
service which allows him to accrue more than 40 years’ total membership before
his normal retirement date” (as stated in the explanatory notes to the amending
regulations). On 1 April 1998 the 1997
regulations replaced the 1995 regulations and contain similar provisions in
paragraph 6 of Schedule 4. Rights
transferred in from non-LGPS schemes are known as “a credited period” (as
provided by regulation 122).
7. The Secretary of State has considered all the evidence. He noted that Mrs XXX of the Pensions Schemes Office of the Inland Revenue wrote to the fund on 9 February 1999 in response to their request for advice on members retiring after 1 April 1998 with more than “40/80ths pensionable service”. The Pensions Schemes Office said in their letter that “Benefits which are transferred in from a non-associated employment fall to be treated as retained benefits under the receiving scheme … transferred benefits may be given on top of the LGPS benefits ie. the transfer benefits need not be subject to the scheme’s limits rule.” A hand written note dated 12 February 1999 at the bottom of the letter says “Mrs XXX … confirmed that I.R. limit rules retrospective and apply when a member retires, regardless of when transfer was received.” The fund also wrote to the Department on 25 February 1999 saying “I understand that Service transferred in to the Scheme prior to the new arrangements introduced by circular 152/73 was treated as “local government service” following transfer in and lost its original character.”
8. It is not disputed that your Civil Service pension scheme rights are a credited period for the purpose of regulation K14 of the 1995 regulations and regulation 122 of the 1997 regulations and was transferred before the 2 May 1995. The Secretary of State noted that neither the Appointed Person or the fund contend that your credited period lost its original character and merged with membership accrued in local government employment nor do they contend that overriding Inland Revenue limits were the reason for their decision that more than 40 years membership cannot be used in the calculation of your retirement benefits. Rather they contend that because your credited period was accepted before 2 May 1995 changes to the LGPS they do not apply to you. The Secretary of State noted that paragraph 9A of Schedule C5 of the 1995 regulations in referring to circumstances where the aggregate of a credited period and a period of membership in local government employment “(excluding any period in excess of 40 years) exceed 40 years that aggregate shall be used for the calculation of the amount of any benefit … subject to any overriding limit on the maximum total benefits, whether in the form of annual pension payments or a lump sum, that may be provided on retirement for the purposes of approval by the Commissioners of Inland Revenue”. Similarly the current 1997 regulations limit total membership to 40 years with the exception of certain specified categories of members and where “a credited period which is counted as a period of membership … ” (paragraph 6 of Schedule 5).
9. The Secretary of State concludes therefore, that paragraph 6 of Schedule 5 of the 1997 regulations currently excludes a credited period from LGPS membership limits used in the calculation benefits. He takes the view that were you to retire at any time between 3 February 2005 and 2 October 2006 the 1997 regulations, as they currently stand and subject to Inland Revenue approval, require the fund to calculate your retirement benefits based on a period of membership greater than 40 years but not in excess of 41 years 240 days. While the Secretary of State accepts that the amendment to Schedule C5 of the 1995 regulations is not retrospective in that the change did not apply where retirement benefits were calculated for payment before 2 May 1995 he takes the view that it provided no time limit on when the credited period was accepted or discretion to override the provision. He therefore allows your appeal.