LOCAL GOVERNMENT PENSION SCHEME APPEAL

 

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)

 

1)      I refer to your letters of 7 July and 8 August 2000 in which you appeal (under regulation 102 of the 1997 regulations), on behalf of Mrs XXX, to the Secretary of State for the Environment, Transport and the Regions against the decision of Mr XXX, the Appointed Person for XXX (the council), in relation to Mrs XXX’s Local Government Pension Scheme (LGPS) dispute with the council.

 

2)      The disagreement referred to the Appointed Person concerned the reduction in Mrs XXX’s LGPS pension following the decision by the council that the payment to her of the Long Service Award was unlawful; the payment could not therefore be included in her final pay (pensionable pay) which was used to calculate her LGPS benefits.  As a consequence Mrs XXX’s annual pension has been reduced.

 

3)      The Appointed Person found that the Long Service Award made to Mrs XXX by the council “… should not therefore have been made and consequently should not have been included within the final pay figure used to determined retirement benefits… from the Local Government Pension Scheme. I therefore believe the Council was correct in its decision to cease pension payments derived from the payment of the Long Service Award.”.  He further found that “the Council still has a case to answer in terms of making these payments in the first place.  The inclusion of the Long Service Award to calculate pension benefits, in my view, represents maladministration on the part of the Council.”.

 

4)      The Secretary of State is aware that the council reduced Mrs XXX’s pension because in their view the payment of the Long Service Award was to reward past service, the purpose of which was to enhance pensionable pay in her last year of service for the sole purpose of boosting pension, for this reason they considered the payment to be unlawful. 

 

5)      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 properly implemented. The Secretary of State has no powers on appeal to consider the legality of payments, other than those which constitute a benefit payable under the LGPS regulations, made to members of the LGPS.  A Long Service Award could not itself be a LGPS benefit.  This is a matter for the council and they have decided that the payment was unlawful.  Therefore, the question for decision by the Secretary of State is whether the Long Service Award payment can be included in Mrs XXX’s pensionable remuneration which is used to calculate her LGPS benefits.

 

6)      Secretary of State’s decision: The Secretary of State notes your arguments that the money paid to Mrs XXX was not a reward for long service so far as she was aware but was remuneration for work done.  Although you argue that the payment was a lawful salary increase for work done, you also state that it was an inducement and was conditional upon her giving one year’s notice.  The Secretary of State finds it difficult to reconcile these statements.  Although you maintain that Mrs XXX was unaware of the history of the Long Service Award and that the payment was not a reward for long service so far as she was aware, you accept that, from the time the money was offered, she was told it was a “Long Service Award”.  The Secretary of State has to accept the decision of the council that the Long Service Award payment was unlawful.  Because the payment is unlawful it cannot be regarded lawfully as remuneration.  Therefore it cannot count as pensionable remuneration on which Mrs XXX’s LGPS benefits are calculated.  It is clear to the Secretary of State that the council should not have made unlawful payments in the first place.  Therefore, the payment of Long Service Award to boost Mrs XXX’s pension, and the subsequent need to withdraw it and reduce her pension, may well amount to maladministration in relation to Mrs XXX’s pension.  However, even where maladministration has led to financial loss or injustice the Secretary of State has no powers to award compensation. 

 

7)      The Secretary of State’s decision confirms the effect of the Appointed Person’s decision.  He 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 which 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 allegation of maladministration or any complaint or 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 0207 834 9144).

 

10)  A copy of this letter has been sent to the Appointed Person and the council.