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Our Ref: LGR 85/18/320 821 INDEX
24 November 2000 |
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 23 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 Council (the council).
2. The Appointed Person upheld the council’s decision that you were sent information on your entitlement to join the LGPS from 2 May 1995 when an election form was sent to your home address in June 1995.
3. The question for decision: The questions for the Secretary of State to decide are whether you are entitled to membership of the LGPS from 2 May 1995 to 1 November 1999 and whether the council are guilty of maladministration.
4. Secretary of State’s decision: The Secretary of State has decided that you are entitled to membership of the LGPS from 2 May 1995 to 1 November 1999 and he finds there is evidence of maladministration.
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 (IDRP). 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: letters dated 23 June, 1 August (enclosures attached) and 10 September 2000 (and enclosures);
(b) from the Appointed Person: letter dated 21 July 2000 (with the enclosures listed in the Department’s letter of 26 July); and
(c) from the council: letter dated 4 September 2000.
4. From the evidence submitted the following relevant points have been noted:
(a) your date of birth is 17 April 1944;
(b) in 1972 you commenced casual work for the council; and
(c) from 1 November 1999 you became a member of the LGPS.
5. On 11 October 1999 you were informed by the council that casual employees have been allowed to become members of the LGPS since 2 May 1995 and that you could not have your election to join the LGPS backdated to May 1995.
6. The Appointed Person found that, “there is no onus on the Trustees of the Pension Scheme to advise casual employees of their right of election to join the Scheme” and that “on the balance of probabilities, notwithstanding the lack of onus … a letter in the attached form was sent to you at your current address in June 1995”. He therefore decided that “there was no maladministration by the Trustees of the Pension Scheme as you were admitted to the Scheme with effect from 1 November 1999 following your written election to join the Scheme on 6 October 1999”.
7. You contend that you did not receive a letter about your right to join the LGPS, and that it has not been shown that you did. You believe that, as the Appointed Person works in the Personnel Department he cannot be considered to be independent.
8. The Secretary of State notes that after the Appointed Person made his decision you sought further comments from him about his findings, and you made further comments on receipt of evidence from him that you had not previously seen. The Appointed Person decided, after receiving legal advice, that he did not have the power to reconsider the matter. That is a matter for the Appointed Person. However, the Secretary of State would expect that, in the interests of natural justice, all the relevant evidence which an Appointed Person proposes to take into account in reaching his decision should be made available to the parties before he makes his decision. He is not required to re-consider new evidence or representations made subsequent to his decision. The Secretary of State takes the view that in your case the issues raised in your additional comments did not sufficiently alter the nature of your appeal as to require re-consideration by either the council or the Appointed Person.
9. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. With effect from 2 May 1995 casual employees with LGPS employers became entitled to elect in writing to join the LGPS under regulation B10(3) of the 1995 regulations. All employees, except casual employees; automatically became members unless they opted out under regulation B10(2).
10. The Secretary of State notes your views about the Appointed Person’s independence. The IDRP is covered by regulations 99 to 105 of the 1997 regulations. The appointment of Appointed Persons is provided for by regulation 99. An application must not be referred to a person who has previously been involved in the subject matter of the disagreement (regulation 99(4)). The Secretary of State’s powers are to re-consider the original dispute, which by its nature cannot include a question about the Appointed Person’s independence. However, the Secretary of State cannot consider an appeal which has not properly completed the first stage of the IDRP process (consideration by the Appointed Person) except where the Appointed Person has failed to issue a decision within the statutory time limits (which he has a statutory power to extend). The Secretary of State would therefore refer an appeal back to the council if it had not been considered at the first stage of IDRP or if that first stage was invalid. You contend that the Appointed Person was not independent as his department was responsible for informing casual staff of their new entitlement to join the LGPS in 1995 and that he may have written a memorandum dated 19 May 1995 about changes in the 1995 regulations for the council’s head of personnel to send to chief officers explaining how staff would be notified of changes to the LGPS. On balance, the Secretary of State takes the view that your arguments do not clearly show that the Appointed Person was personally involved in the subject matter of your dispute such as to make the first part of the IDRP process invalid, and he has decided therefore not to send your appeal back to the council.
11. The Secretary of State next considered the issue of your entitlement to elect to join the LGPS in 1995. He has considered all the evidence. It is not disputed that as a casual employee of the council on 2 May 1995 you were entitled to join the LGPS if you made a written election and that you did not do so until October 1999. The council have provided a copy of a letter from the council dated June 1995 marked “URGENT … THIS WILL AFFECT YOUR PAY”. The letter was not addressed. Attached to it was a list of the main benefits of the LGPS and an election form for opting out of the LGPS. The letter explained that all employees would be automatically considered members of the LGPS unless they opted out. A copy of a draft of a further letter (with miscellaneous amendments) was attached to this letter entitled: “CASUAL EMPLOYEES: LGPS REGULATIONS 1995”. This letter differed from the above letter in that it was not dated nor on headed notepaper. It contained a tear off form specifically for casual employees to elect to join. The council say that this was a “standard letter produced together with a “peel off” sticky name and address label obtained from the current payroll … sent to every employee”. The council’s head of personnel sent a memorandum dated 19 May 1995 about changes in the 1995 regulations to their chief officers. Under the heading “Casual Staff” the memorandum explained that “These employees will be notified of their option to join the Scheme … to their home addresses. This notification will require that they make a decision regarding whether or not they want to join”. In addition to the distribution of the above information about the LGPS changes in 1995 the council contend that it was their practice to enclose information with pay slips. The council also say that a significant number of casual employees did join the scheme from May 1995. You contend that you did not receive a letter about your right to join the LGPS in 1995 and that the council cannot show that you did.
12. The Secretary of State in reaching his decision has had to consider whether the council were required under the rules governing the LGPS to inform you of your right to elect to join the LGPS, whether there is sufficient evidence from which it would be reasonable to conclude that you were not informed and, if so, whether you would have joined if you had been informed.
13. The Secretary of State takes the view that the Occupational Pensions Scheme (Disclosure of Information) Regulations 1986, to which the LGPS was subject, required your employer to inform you when you became eligible to elect to join. It is in care axiomatic that to exercise an option you had to be informed that you had such an option to exercise. He finds the Appointed Person’s finding that there was “no onus on the Trustees … to advise casual employees of their right of election.” to be wrong in law and untenable in practice. You contend that it was always your wish to join the LGPS but that you were advised that you could not join and that you joined as soon as you became aware that you could. The Secretary of State considers that after five years records should still be available which could confirm whether or not you were sent information about your rights to join the LGPS in 1995. He notes that the council failed to provide copies of the original documents used in the distribution of the relevant information to all its employees including casual employees. The Secretary of State is concerned that the council took no action to ensure that the option form, which they maintain they sent to you in June 1995, was received. You say that having spoken to many of your colleagues you discovered that they also did not receive the information. The conclusion you draw from this is that employees in your area of work were omitted from the distribution. You also suggest that in their investigation of your appeal the council have shown that their records are not accurate. In the Secretary of State’s view, by sending only one letter and taking no follow-up action, the council did insufficient to ensure you were properly informed. The council say that the relevant letters and option forms were sent to your home address and their current records confirm your correct address. They also say that payslips would have contained information on pension entitlements but do not provide evidence that action was taken to notify employees through their payslips. He notes that the head of personnel’s memorandum to chief officers dated 19 May 1995, about changes in the 1995 regulations, does not refer to employees being informed of pension changes through payslips. You do not address the issue of whether or not at any time you received information about the LGPS in your payslips. Nor have you produced any objective evidence that prior to 1999 you investigated joining the LGPS, but the Secretary of State notes that you did so elect to join within a few years of becoming eligible.
14. The Secretary of State concludes that the council were required under the rules governing the LGPS to inform you of your right to elect to join the LGPS. He accepts that it is not possible to prove categorically whether you received the information because the council have failed to keep records. However he finds there is insufficient evidence from which he can clearly conclude that you were properly informed and that on balance the probability is that you were not. He cannot be certain that you would have joined if you had been informed, but on balance, on the basis of your subsequent action to join and the lack of dispute that you had made previous enquiries when you were not eligible, he considers it likely that you would have done so. On this count the Secretary of State takes the view that the council are guilty of maladministration, which has led to injustice. The Secretary of State does not have the power to award compensation in cases of maladministration. However, he takes the view that he can order redress where (and only where) this lies within the statutory requirements of the scheme. In this case he finds he can do so by requiring the council to give you membership, subject to you paying the back contributions, with effect from 2 May 1995.