LOCAL GOVERNMENT PENSION APPEAL

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 2 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 Ms XXX, the Appointed Person in relation to Mrs XXX’s local government pension scheme (LGPS) dispute with XXX (the council).

2.                  The Appointed Person upheld the council’s decision that Mrs XXX suffered no financial loss as a result of their error over her admission to the LGPS, despite her being unable to obtain tax relief on pension contributions she paid retrospectively that is available to members who pay contributions as they accrue membership.  However, the Appointed Person recommended that the council make a “goodwill” payment of £200.

3.                  The question for decision: The Secretary of State takes the view that the question he has to decide is whether the council have the power under provisions governing the LGPS to award Mrs XXX compensation for their error in not admitting her to the LGPS when she first became eligible to be a member on 15 November 1986 which may have caused her financial loss or injustice.

4.                  Secretary of State’s decision: The Secretary of State has decided that, although it is not disputed that as a result of an error by the council Mrs XXX was not able to claim tax relief on her LGPS contributions, under the statutory provisions governing the LGPS the council have no power to award compensation even where it is shown that a failure or omission on their part may have caused financial loss or injustice.  The following paragraph explains why.

5.                  The Secretary of State’s powers under regulations 102 and 103 of the 1997 regulations are to reconsider a matter relating to the LGPS.  Effectively this means whether the rules governing the LGPS have been properly applied to ensure that a beneficiary of the LGPS is awarded the correct entitlement under the appropriate regulations.  The Secretary of State notes that there is no dispute that Mrs XXX has been awarded the correct entitlement under the 1995 regulations applicable when she retired voluntarily on 27 September 1996.  Like the Appointed Person the Secretary of State has no powers to direct a local authority to act outside the provisions of the regulations.  Nor has he the power to modify the way the regulatory provisions apply to the facts of the case.

6.                  The Secretary of State has considered your letter of 2 August 2000 and enclosures, and the relevant regulations.  When Mrs XXX retired from her employment as a personal carer with the Council on 27 September 1996 she was awarded payment of her pension benefits under the 1995 regulations for a period of membership accrued from 15 November 1986.  The decision to backdate Mrs XXX’ membership was however not taken until August 1997, following her retirement, and consequently her standard contributions under regulation C4 of the 1995 regulations, were deducted retrospectively.  The Appointed Person explained that “When Mrs XXX’ pension arrangements were put in place the Inland Revenue applied its usual rules on the granting of retrospective tax relief on Mrs XXX’ pension contributions from 15 November 1996, which were not allowed.”  As a result Mrs XXX claimed compensation from the council for retrospective tax relief, not granted by the Inland Revenue, on contributions plus interest on the tax relief.  The Secretary of State noted that the council and the Appointed Person did not agree that, on balance, Mrs XXX suffered financial loss.  Although the council paid compensation for “time, trouble and concern” experienced by Mrs XXX and her husband as a result of pursuing this matter it is the Secretary of State’s understanding that this was not a payment under the provisions of the LGPS.  He takes the view that the Appointed Person’s recommendation to the council that they award a £200 “goodwill” payment cannot be paid out of the appropriate local government pension fund.  He cannot comment on any other powers available to the council to pay such a compensation payment.  Furthermore, even where it is shown that there was the question of financial loss incurred as a result of a failure of administration, he has no power to award compensation.

7.                  The Secretary of State dismisses your appeal.  His decision confirms the effect of that made by the Appointed Person so far as their powers under the LGPS are concerned.

8.                  The Secretary of State is acting judicially.  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.

9.                  This completes the second stage of the internal dispute resolution procedure.  It is understood that as you are acting on behalf of Mrs XXX, she is aware of the Pensions Advisory Service’s (OPAS) role to assist members and beneficiaries in connection with difficulties they have failed to resolve and that you will continue to assist her if she so wishes.

10.              As you know 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).