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Our Ref: LGR 85/18/319 16 November 2000 818 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 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 in relation to your local government pension scheme (LGPS) dispute with XXX (the council).
2. The Appointed Person upheld the council’s decision to reduce the payment of your retirement benefits due to a recalculation of your pension entitlement.
3. The question for decision: The question the Secretary of State to decide is whether, for the purposes of applying the 1986 regulations, your former duties as Finance Officer for the XXX constituted a separate employment from your employment as the council’s Acting Director of Finance.
4. Secretary of State’s decision: The Secretary of State has decided that your former duties as Finance Officer for the XXX did constitute a separate employment from your employment as the council’s Acting Director of Finance.
5. The Secretary of State dismisses your appeal. His decision replaces but has the same effect as 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 financial loss or injustice is suffered as a result of maladministration 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.
SUBMISSIONS RECEIVED |
2. The following submissions have been received and taken into account:
(a) from you: letters dated 20 June and 28 July 2000 (with enclosures); and
(b) from the Appointed Person: letter dated 14 July 2000 (with enclosures copied to you with the Department’s letter of 19 July).
3. From the evidence submitted the following relevant points have been noted:
(a) from 26 January 1959 until you retired on 16 May 1990 you were a local government pensionable employee;
(b) for a period preceding your retirement you were employed by the council as Acting Director of Finance;
(c) you also acted as Finance Officer for the XXX from 1 October 1987 for 2 years and 228 days until you retired;
(d) you were paid an honorarium for your duties as a Finance Officer to the XXX;
(e) when you retired on 16 May 1990 your salary and honorarium were aggregated and treated as remuneration for a single employment for the purposes of calculating your pension; and
(f) from 15 June 1998 your pension payments were reduced as a result of the council’s decision that your XXX duties constituted a separate employment for pension purposes.
4. The contentions of the parties are clearly set out in the representations submitted to the Secretary of State. All have been carefully considered. The Secretary of State does not propose to re-state them in detail here. Relevant points are referred to as they arise below. In summary, you maintain that no paperwork was sent to you, nor any other intimation made, to suggest that your duties for XXX were a separate employment, XXX had no contact with you on employment matters and you were not subject to their terms and conditions. So far as you were aware, the XXX duties were additional duties within your employment as the council’s Director of Finance and essentially fell to you ex officio. The council maintain that when your pension was calculated in 1990 you were treated as in a single employment, but some 8 years later they decided your XXX duties constituted a separate employment for pensions purposes, following an Auditor’s report in the XXX and oral legal opinion.
5. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. When you ceased employment with the council and were awarded early payment of your pension benefits the 1986 regulations applied. Under those regulations benefits have to be calculated separately in respect of separate concurrent employments. Regulation B6 says “Where a person holds two or more separate employments under one scheduled body, then unless the context otherwise requires these regulations apply in relation to each of those employments as if the other or others were held by him under another scheduled body.”.
6. The Secretary of State has decided first to dispose of two important, but in his view peripheral, issues. He notes that an extract of another appeal case has been submitted where the appellant has been named. The Secretary of State is unclear how this case came to your attention. No evidence has been provided to indicate that the appellant gave approval to his case being considered. Public discussion of cases relating to a named individual’s personal circumstances breaches fundamental principles of confidentiality and privacy unless it is clearly shown that it is done with the express consent of the individual concerned. Furthermore, the Secretary of State emphasises that each case must be considered on its merits in the light of its individual circumstances; consideration of other cases may be inappropriate and not relevant in reaching a decision since circumstances are unlikely be identical in each case. He notes the Appointed Person’s view that the two cases are identical. The Secretary of State does not agree. In the other case cited the XXX duties included those of a returning officer. Regulation B5 of the 1986 regulations which requires returning officer duties to be treated as a separate variable time employment were referred to in that case. Your XXX duties did not include those of a returning officer. The Secretary of State is satisfied that, as well as the representations and evidence, the facts in the two cases are materially different.
7. Secondly, the Secretary of State notes that an Auditor’s report in XXX has been referred to in evidence. The Secretary of State recognises that this was the document which led the council to decide afresh in 1998 whether your XXX duties constituted a separate employment. The question for decision in your case is whether your XXX duties did constitute a separate employment from your employment as the council’s Director of Finance. That should, in the Secretary of State’s view, be a matter of employment fact. The XXX auditor’s report has not been submitted, and the Secretary of State has been provided with no evidence to convince him that it is evidence which is material to determining that fact. No issues concerning the lawfulness of the honorarium or its treatment as remuneration for pension purposes have arisen in your dispute.
8. Turning to the central issues, the Secretary of State notes that a fundamental part of your case is your contention that you were not an employee of XXX. The council maintain that, for pension purposes, you were. The Secretary of State does not regard it the question whether you were an employee of XXX as necessarily conclusive. The crucial question is whether your XXX duties were a separate employment. Regulation B6 provides that two separate employments by the same scheme employer should be treated as if they were separate employments with different scheme employers. It is clear to him that this regulation envisages the possibility of you having two separate concurrent employments with the council, and that in such a case they should be treated as separate employments for the purposes of calculating pension benefits. The question is whether your employments were separate, not whether you were employed by different employers. However, if it could be shown that XXX was your employer, it would in the Secretary of State’s view necessarily follow that the employments were separate.
9. The question is not in essence a pension one: it is an employment one concerning your contract or contracts and terms and conditions of employment. The pension consequences flow from it, but do not drive it. The Secretary of State notes that the council said that “for pension purposes (and may be for pension purposes only)...it constitutes a separate employment”, but have produced no evidence to support a proposition that a single employment for all other purposes should be treated as two separate employments for pension purposes in the particular circumstances of your case.
10. The Secretary of State finds that there is plenty of representation but virtually no objective evidence concerning your employment status with regard to your XXX duties. No contract of employment, terms and conditions, or job descriptions have been submitted in relation to any of your duties. It is not disputed that the XXX duties were not at the time specifically stated to be part of your duties as the council’s Director of Finance, nor that the arrangements have since been changed to make XXX duties part of an officer’s employment with the council.
11. The Secretary of State notes the following factors which could be held to suggest that your XXX duties were a separate employment:
· The XXX was a separate statutory body.
· The XXX appointed the Finance Officer individually every year.
· An honorarium was paid in respect of the XXX duties which was separate from your salary as the council’s Director of Finance
· The XXX agreed the level and met the cost of the honorarium.
· No evidence has been presented to suggest that when you were appointed as adviser to the XXX your contract of employment or terms and conditions with the council were altered to embrace the appointment.
· It is not disputed that the duties were not among those specifically forming part of your employment as the council’s Director of Finance.
· Although you maintain that your position at XXX “derived more or less ex officio from [your] appointment at XXX”, no evidence has been presented to show that the XXX duties must necessarily have been undertaken by the council’s Director of Finance.
12. On the other hand, the Secretary of State notes there are factors which might be argued to suggest that the XXX duties were not a separate employment:
· You and the council agree that neither the XXX nor the council gave you a separate written contract of employment.
· It is not disputed that you were not given a letter of appointment from either party.
· It is not disputed that none of XXX’s terms and conditions of employment applied to you.
· The XXX recommended making your appointment “subject to the approval of the relevant employing council” (report of the clerk, doc. ref. XXX/87/212 dated December 1987).
· The council concede that it was “assumed at the time of your retirement” that your XXX duties were additional to your main employment rather than constituting an entirely separate employment, and that it was “clearly the view taken by officers within XXX when they calculated [your] pension” that you received your honorarium in relation to the XXX as part of your employment by council.
13. The Secretary of State does not consider that it has been convincingly shown that a contractual employee/employer relationship was established between you and the XXX, although it is not clear whether this was by negligence or by design. In reaching this view he is particularly mindful of the first four factors in paragraph 12. Notwithstanding that, he does not consider this conclusively shows that you were in a single employment. On the contrary, he regards the factors at paragraph 11 as sufficient to show that your appointment to the XXX was quite separate and distinct from your employment as the council’s Director of Finance. He accepts that the council subsequently amended the arrangements to include such an appointment as part of an officer’s employment with the council. You maintain that this demonstrates the council’s earlier intention and they should be bound by it. The Secretary of State takes the view that a later change in the arrangements cannot be held to apply to your employment status at the time. He regards it as deeply unsatisfactory that the terms of your XXX appointment and its employment status were not made clear and properly documented at the time, and that the council made a decision on your benefits which they subsequently found to be flawed and had to retract. It may be that this amounts to maladministration. Nonetheless, in his view, your XXX appointment was a separate employment for which you received an honorarium paid by the XXX through the council. Since the Secretary of State is unable to find evidence that convincingly establishes the XXX as your employer, he concludes that you may be held to have been employed by the council in a separate capacity from your employment with them as Director of Finance, and in effect filled your appointment with the XXX on terms akin to secondment.
14. It is for the council to decide whether the honorarium constitutes pensionable remuneration within the meaning of the regulations. The Secretary of State notes that they consider it does, and he concludes that they therefore regard your XXX appointment as an LGPS employment and the honorarium as a fee or other payment paid to you for your own use in respect of that employment.