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Our Ref: LGR 85/18/327 December 2000 825 INDEX |
LOCAL GOVERNMENT PENSION APPEAL
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997
I refer to your letter of 14 June in which you appeal against the decision of Mr XXX, the Appointed Person in relation to your local government pension scheme (LGPS) dispute with the XXX (the company). Your letter was addressed to the Secretary of State for Social Security but was passed on to the Secretary of State for the Environment, Transport and the Regions who has the authority under regulation 102 of the 1997 regulations to consider your appeal.
1. The Appointed Person upheld the company’s decision that you were not entitled to early release of your retirement benefits on compassionate grounds. You contend you were not dealt with fairly.
2. The question for decision: The question for the Secretary of State to decide is whether the company acted unreasonably or improperly in deciding not to pay your retirement benefits early on compassionate grounds.
3. Secretary of State’s decision: The Secretary of State has decided that the company did not act unreasonably or improperly in deciding not to pay your retirement benefits early on compassionate grounds.
4. The Secretary of State dismisses your appeal. His decision confirms that made by the Appointed Person.
5. 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.
6. 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.
7. 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).
8. 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. The disagreement you referred to the Appointed Person is whether the company should pay your retirement benefits early on compassionate grounds.
2. Whether or not to pay your benefits on compassionate grounds is a matter for the company’s discretion. The Secretary of State will not, under the 1997 regulations, overturn a decision where the company have exercised a discretion. His role is, rather, to ensure that the discretion has not been exercised unreasonably, improperly and, in cases where it has, to determine that the matter should be reconsidered in a proper manner. The Secretary of State has no powers to direct a local authority to act outside the provisions of the regulations.
3. The Secretary of State has considered all the representations and evidence, and has taken into account the appropriate regulations.
4. The following evidence has been received and taken into account:
(a) from you: letters dated 14 June and 19 August 2000 (with enclosures);
(b) from the Appointed Person: letter dated 8 August 2000 (with the enclosures listed in the Department’s letter of 15 August); and
(c) from the company: letter dated 5 September 2000 (copy enclosed).
5. From the evidence submitted the following relevant points have been noted:
(a) your date of birth is 16 February 1944;
(b) in 1985 were made redundant by XXX;
(c) on 1 June 1999 you applied to the company for the an early payment of your preserved pension benefits; and
(d) on 4 October 1999 the company sent you their decision that they “are unable to pay your deferred benefits early on compassionate grounds”.
6. You appealed to the Appointed Person against the company’s decision. You stated that at the time of your severance, you had nearly 25 years service in the water industry. Had you been aged 50 at the time you would have received your pension, but as you were aged 42 this was not allowed and therefore you felt you had been discriminated against. As you are now aged 56 you feel that your pension should be offered to you.
7. The Appointed Person found that the provisions of the 1995 regulations applied in your case. He referred to the company’s letter to you of 23 November 1999 which stated that where a member leaves local government employment and is entitled to a deferred retirement benefit, the early payment of the benefit, “after the age of 50, will only be considered if the former employing authority recommend payment on compassionate grounds.” He decided that “as your employing authority are not willing to consent to the advanced payment of your deferred pension, then in accordance with the Regulations, an early payment of your benefits cannot be put in place … the XXX have criteria within which to consider applications for early payment, and … your request is outside the scope of the guidelines to grant approval.”
8. You claim that the Appointed Person and the company’s decisions were unfair. You contend that you received insufficient explanation of the qualifying criteria for receiving early payment of your pension and therefore the decision should be reconsidered. You say that you have been self employed since you ceased to hold LGPS employment, and that “due to the economic climate of those years have not been able to earn monies equal to that expected had I still been employed at XXX”. You point out that your income is so low you do not have a tax obligation. You concur with the Pensions Committee’s comment that there is nothing to prevent you from seeking employment; however, you maintain that because of your age and lack of qualifications you would not be able to obtain a job in your area of work as most firms operate policies, similar to those set out in XXX’s rules of early retirement for employees between 55 and 60 to encourage recruitment and retention of a younger workforce.
9. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. When you made redundant by XXX in 1985 you became entitled to deferred (preserved) benefits under the provisions of the Local Government Superannuation Regulations 1974. The 1986 regulations replaced the 1974 regulations when they came into force on 1st March 1986 and these remained in place until they were revoked and superseded by the 1995 regulations with effect from 2 May 1995.
10. At the time you applied to the company for the early release of your deferred LGPS benefits the 1995 regulations had been replaced by the 1997 regulations (which came into effect on 1 April 1998). However, as you were not employed in local government after 1 April 1998 the regulations which apply in respect of your preserved benefits are the 1995 regulations. Regulation D11(2)(c) of the 1995 regulations states that preserved benefits may be put into payment at “any date after (a deferred member) has attained the age of 50 years from which the employing authority determine on compassionate grounds that the benefits are to become payable.”
11. The Secretary of State notes that you feel discriminated against because when you were made redundant at age 42 you did not become entitled to the immediate payment of your retirement benefits which you would have received had you been age 50 or over. Any question regarding whether or not you should have been made redundant at age 42 is an employment matter and should have been addressed at the time. This is not a question which the Secretary of State can consider on appeal. He notes your reference to a DSS appeal in 1985. But he considers that this is not a matter which falls within his jurisdiction. His jurisdiction is solely whether the LGPS regulations in respect of your retirement benefit rights are applied correctly and it is clear from the information available that when your former employer certified you as being redundant you were correctly awarded preserved benefits in accordance with the LGPS rules.
12. The Secretary of State notes the Appointed Person’s decision.
13. Turning to the substantive issue of your appeal, regulation D11(2)(c) of the 1995 regulations permitted a person age 50 or over, who had ceased to hold his employment with a right to deferred benefits, to elect for the early payment of his benefits on compassionate grounds. The determination of a question under this regulation is a discretionary one and the company, who inherited the employer responsibilities of XXX, have the power to decide whether or not your preserved benefits should be brought into payment early. The Secretary of State notes that on 17 May 1999 the company sent to you a forecast of your pension and the conditions for claiming an early payment (copies of which have not been made available). On 1 June 1999 you wrote to the company asking for the payment of your pension, explaining that due to the economic climate you had not been able to earn monies equal to “that expected had I still been employed by XXX” and that you wished to afford you and your family financial security. The company then requested details of your financial hardship. You sent them your Self-Assessment Tax Calculations for 1996/97 and 1997/98. The company’s response was to refuse your application in their letter of 4 October 2000. You therefore sought to appeal against this decision. On receiving further information about the appeal procedure you discovered that you could seek the reasons for the company’s decision. The company explained that their decision was made “subject to agreed guidelines”. You did not meet the criteria of those guidelines and that the sort of application that might be granted could be where it was not possible for an individual to work because of the need to care for a relative with long term disabling illness that required full time care.
14. After you made a further request for the rules governing their decision the company explained that these were set out in the 1995 regulations and that the regulations state “that a standard retirement pension and standard retirement grant are payable from “any date after he has attained the age of 50 years which the employing authority determine on compassionate grounds that the benefits are to became payable”. ”
15. The Secretary of State notes that the guidelines referred to above are contained in the company’s “Statement of Policy on Discretions”. It says that in the past benefits were paid early when a “deferred pensioner” has not been able to seek employment through having to care for an elderly or sick relative, that as such circumstances are sometimes temporary a more appropriate example might he where the former employee is living in an area where the possibilities of securing any further employment are extremely remote. The guidance further states that the company will examine each case on its merits taking into consideration, inter alia: the likely period of compassionate grounds will last into the future; the nature and reason for the employee leaving; the member’s or deferred pensioner’s age and period of membership; and income being received from other sources. In addition to this policy the costs to the company’s pension fund was among the considerations in the guidance.
16. The Secretary of State notes the document providing for the relevant committee of the company to consider your case, that they considered payment of benefits on compassionate grounds, your age, your LGPS benefit entitlement when you were made redundant, when those payment are due to be paid, a statement from your letter of 1 June 1999 and the value of your retirement benefits. The Pensions Committee recommendation was that early benefits should not be paid as there was “nothing to prevent (him) from seeking employment”. The Secretary of State notes that it is not clear whether they considered your Self Assessment Tax Calculations or your period of membership. However, it appears they were aware of your income level and the recommendation reflected your income prospects. The explanation the company gave you in their letter of 20 October 2000 indicated that you did not meet the criteria rather than they felt you could obtain further employment.
17. The Secretary of State takes the view that the ordinary duty, which the law imposes on a person who is entrusted with the discretionary power, is that he should exercise it for the purpose that it is given, giving proper consideration to the matters that are relevant and excluding from consideration matters which are irrelevant. The decision should not be so arbitrary and irrational that no, reasonable person, on the facts of the case, have exercised discretion that way. He takes view that it has not been shown that the company did not carry out their duty properly. He accepts that the company did not at first provide you with advice covering the full grounds on which they would consider making an early payment of benefits, that they only requested details of the financial hardship you reported to them. However, he takes the view that this did not prevent them obtaining the relevant details necessary for them to consider your claim or cause them to miss relevant aspects of your circumstances. The 1995 regulations did not impose a requirement on the employer to publish details of the criteria they used in exercising their discretion. However, it is clear that by sending you a copy of their “statement of Policy on Discretions” the company were acting in the spirit of the prevailing standards which applied. That is they were giving greater transparency to their decision making process. The Secretary of State notes that the grounds for your claim did not substantially alter from when you wrote to the company on 1 June 1999 to when you appealed to the Appointed Person.
18. The Secretary of State concludes that the company’s decision was not unreasonable in that it was not one no reasonable person could make he therefore dismisses your appeal.