828 INDEX
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (the 1986 regulations)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (the 1995 regulations)
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (the 1997 regulations)
1. I refer to your letter dated 24 July 2000 in which you appeal (under regulation 102 of the 1997 regulations), against the decision of Mr XXX, the Appointed Person for XXX Council (the council), in relation to your local government pension scheme (LGPS) dispute with the council.
2. The Appointed Person found that the council applied the LGPS regulations correctly and consequently abated your pension.
3. You do not dispute that it was necessary to abate your pension due to your subsequent reemployment following your retirement on 31 December 1992. However, you have asked the Secretary of State to consider whether the council provided you with sufficient information regarding further employment with a LGPS employer when your employment ceased on 31 December 1992. You have also asked him to consider the fact that the council did not identify the effect of your subsequent employment until August 1999 despite the fact that you were employed by XXX (the school) from 1 April 1993.
4. The question for decision: The question for decision by the Secretary of State is whether there has been maladministration by the council.
5. The Secretary of State’s decision: The Secretary of State finds that the council may have been guilty of maladministration in regard to the LGPS but he is not clear that you have suffered financial loss or injustice and he has no power to award compensation.
6. The Secretary of State’s decision confirms that made by the Appointed Person, although because the reasons are different it technically replaces it.
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 any 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 they have failed to resolve. Their address is 11 Belgrave Road, London, SW1V 1RB (telephone 020 7233 8080).
9. The Pensions Ombudsman may investigate and determine any allegation of maladministration or 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 020 7834 9144).
EVIDENCE RECEIVED
1. The following evidence has been received and taken into account:
a) from you: letters dated 24 July 2000 (with enclosures), 3 September 2000 and undated letter received by the Department on 5 October 2000;
b) from the Appointed Person: letter dated 16 August 2000 with copies of the documents considered by him (copied to you with the Department’s letter dated 22 August 2000) and letter dated 18 September 2000.
THE SECRETARY OF STATE’S POWERS
2. 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 in cases where claims are made of maladministration with regard to the LGPS even where this has led to financial loss or injustice. The Secretary of State has no powers to direct the council to act outside the provisions of the regulations.
REGULATIONS CONSIDERED AND REASONS FOR DECISION
3. From the evidence received the following points have been noted:
a) you were employed by XXX County Services until your retirement on 31 December 1992;
b) you became entitled to the immediate payment of your LGPS retirement benefits and in addition were given an award of 10 compensatory added years;
c) your LGPS benefits were paid to you from 1 January 1993;
d) on 1 April 1993 you took up employment as a groundsman at XXX;
e) you completed XXX Council’s form SR59, relating to membership of the LGPS, on 26 May 1996 and submitted a copy to the council;
f) the council wrote to you on 10 August 1999 informing you that due to your employment at XXX you had received overpayments in respect of your LGPS benefits.
4. The Appointed Person determined that “[The council] have correctly applied the rules as prescribed by Government. Whilst they may have been apparently … dilatory in picking up information you gave in SR59, once they discovered that you were contributing to the same Fund scheme (through what is called a Scheduled Body), they have no choice but to apply the rules. The calculation is about earnings limits on re-employment with an employer who is within the scheme that you were previously a contributor to. The £16,000 (approx.) figure is a recovery of overpayment of pension to keep you under the maximum income eligibility under the Local Government Superannuation Scheme. … There is no choice about this and the Superannuation Fund scheme staff must apply the Regulations – there is no discretion about this.”
5. The Secretary of State in reaching his decision has had regard to the regulations, which, in his view, apply. At the time you retired and started working for XXX the 1986 regulations were in force. The 1986 regulations required a member’s benefits to be reduced, in certain circumstances if the member started working for a “scheduled body”. The 1995 regulations replaced the 1986 regulations from 2 May 1995 and similar provisions applied (Schedule D5, Part 1). The council only became aware that you had started working for a “scheduled body” in 1996 and they applied the provisions of the 1995 regulations. The Secretary of State agrees that these are the appropriate regulations. The 1997 regulations apply to individuals who were contributing members of the LGPS on 1 April 1998. The 1997 regulations do not apply in this case as although you were a contributing member of the LGPS on 1 April 1998 your dispute relates to the abatement of your pension awarded in respect of an earlier period of membership and you ceased being a contributing member in relation to this period on 31 December 1993. In the 1995 regulations reference is made to a LGPS employer rather than a “scheduled body”. “Scheduled body” included local authorities and grant maintained schools “LGPS employer” also includes them. The procedure to be used where a person’s retirement pension is required to be reduced was the same under the 1986 and 1995 regulations.
6. The Secretary of State notes that you are in receipt of payments in respect of a credited period (commonly known as compensatory added years). From the evidence available it would appear that the amount payable has been included with your local government pension. Such awards may be subject to abatement but the council must look at this separately since they are not awarded under the LGPS. The Secretary of State does not have powers to consider disagreements arising under the Local Government (Discretionary Payments) Regulations 1996. However, he considers that your pension would have had to be abated even without the award of a credited period, albeit not to the same level, and therefore he can consider questions relating to the abatement of your pension. The Secretary of State notes that the council, in their letter dated 5 February 1993, showed how much of your annual pension was attributable to your local government pension and how much related to your added years.
7. Under the 1997 regulations the council have a duty to maintain the pension fund although there is no specific provision for the council to recover overpaid benefits or the way such benefits are recovered. In such circumstances the Secretary of State does not have the power to intervene or take a view on the method or procedure to be used to recover any overpayment.
8. The Secretary of State notes that the council’s letter, dated 5 February 1993, stated “Your pension and added years benefit may be subject to reduction or suspension if you enter further employment with a local authority whilst on pension, and under the provisions of the above regulations you are required to let me know if you should undertake such employment.” He also notes that you explain that the headmaster of the school informed you that “…the school was not a local authority but a self governing entity divorced completely from the County Council…”. You contend this statement arose when you were considering accepting an employment with the school but had queried the effect on your pension. The Secretary of State notes that it appears you relied upon the assurances of the headmaster, which were incorrect. He notes that you have stated “…I received a phone call from the headmaster of XXX he informed me the school had applied for grant maintained status and if granted would like me to apply for the post of groundsman, it was granted and I then informed the headmaster that I could not work for another local authority as I did not want to risk my pension his reply was that the school was not a local authority but a self governing entity divorced completely from the County Council… with that I accepted the post…”.
9. The Secretary of State considers that you were aware that the school might be regarded as a local authority and you state that you sought assurances from the headmaster that your pension would not be affected before accepting employment with the school. He takes the view that having identified that employment with the school might be considered employment with a local authority you should have raised the matter with the council, as advised in their letter dated 3 February 1993, as the authority responsible for your pension rather than relying solely upon the views of the headmaster.
10. The Secretary of State notes that following the introduction of the 1995 regulations the council sent you forms entitled XXX County Council, Local Government Pension Scheme. He notes that you state you did receive forms from the council relating to LGPS membership but initially did not return them as you considered the council would not let you rejoin the scheme. He notes that you completed the council’s pension scheme form, dated 14 May 1996, which appears to have been received by the council on 10 June 1996, and requested that your LGPS membership be backdated to 2 May 1995. He notes that all staff in local authority employment, not previously entitled to join the LGPS, were automatically made members of the scheme from 1 October 1995 unless they specifically stated that they did not want to join. The Secretary of State considers that the form submitted by you, dated 14 May 1996, was the first time that the council became aware that you were working for a LGPS employer. He further notes that you have not claimed that you told them at any time. The Secretary of State considers responsibility for informing the council of any re-employment rests with the member who is in receipt of a pension. He notes that you were concerned that working for the school could have affected your pension, but that you did not check with the council. He accepts the council were indirectly informed by you that you were in receipt of a pension and had been employed by a LGPS employer, from 1 April 1993, on 10 June 1996, when the council received your completed pension form.
11. The Secretary of State notes that it was not until 10 August 1999 that the council wrote to you informing you that you had been overpaid pension due to your employment at the school since 1 April 1993 and seeking to recover the overpaid money. He notes that the council contends that due to the change in regulations when the 1995 regulations came into force on 2 May 1995 some six thousand people became members of the LGPS with the council. However, the Secretary of State considers that it has not been explained to his satisfaction why it took from 10 June 1996 to 31 July 1999 for the council to identify the need to abate your pension. He considers this may amount to maladministration on the part of the council. However, it is not clear that you have suffered financial loss or injustice as a result, as had the council contacted you in June 1996 to inform you of the necessary abatement of pension arising due to your further local authority employment it is not clear whether you would have discontinued that employment at that time.
12. The Secretary of State concludes that you were aware that working for a school could affect the amount of your LGPS benefits during the period you were employed, although you believed this was not the case. However the Secretary of State would have expected you to have raised the matter with the council if you were unsure. However with effect from the 10 June 1996 the council were aware that you were employed with a LGPS employer, and failed to take appropriate action. Whilst this may have amounted to maladministration there is no clear evidence it has caused you financial loss or injustice.