SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION (MISCELLANEOUS PROVISIONS) REGULATIONS 1986 (the 1986 regulations)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997(the 1997 regulations)

1. I refer to your letter dated 7 June 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 pensions scheme (LGPS) dispute with the council.

2. The Appointed Person found that Mr XXX was not eligible to be a member of the LGPS for the period of his employment with XXX Limited (the company) and that death in service lump sum and pension benefits were consequently not payable from the XXX Council LGPS Fund.

3. The question for decision: The question for decision by the Secretary of State is whether you are entitled to payment of LGPS benefits in relation to the period Mr XXX was employed by the company.

4. The Secretary of State’s Decision: The Secretary of State finds that Mr XXX was not entitled to be a member of the LGPS for the period of his employment with the company and therefore there is no entitlement to any benefits.

5. The Secretary of State’s decision confirms that made by the Appointed Person.

6. While the Secretary of State is unable to make any other decision, he notes with extreme concern that through no fault of your own or your late husband’s you are unable to obtain benefits in relation to your late husband’s employment with the company. He notes that your husband may have been eligible to join the company’s own occupational pension scheme, but the company effectively barred him from doing so by wrongfully admitting him to the LGPS. The Secretary of State suggests that you may wish to consider whether you are entitled to appeal against the company excluding him from a scheme that he may have been entitled to join. OPAS, whose details are given below, may be able to offer you further advice and assistance on this.

7. The Secretary of State’s reasons and the regulations which he considers apply in this case are set out in the annex to this letter, which forms an integral part of the 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 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 Pensions Ombudsman.

8. This completes the second stage of the internal dispute resolution procedure. The Pensions Advisory Service (OPAS) is available to assist member 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 complaint of maladministration or any dispute of fact or law 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: letter dated 26 July 2000; and

b) from the Appointed Person: documents considered by him (list enclosed in the Department’s letter dated 4 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 statutory provisions governing the LGPS have been correctly applied in the circumstances. 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) your husband, Mr XXX, was employed by XXX Council from 4 June 1990;

b) his employment was terminated on 10 April 1998 by reason of his resignation;

c) during the period of Mr XXX’s employment with XXX Council he was a member of the LGPS;

d) Mr XXX was awarded deferred LGPS benefits when his employment with XXX Council was terminated;

e) Mr XXX voluntarily took up an employment with the company on 14 April 1998;

f) Mr XXX was employed by the company until his death on 14 September 1999;

g) the council refused to make payment of a death grant and spouse’s pension for the period relating to Mr XXX’s employment with the company, as they contend he was not entitled to be a member of the LGPS for that period.

4. You maintain that Mr XXX and the company believed he was eligible to join the LGPS when they employed him. You contend that he understood he had joined the scheme, his employer believed him to be a member of the scheme and his contributions were paid and accepted. You consider that it is unfair and unreasonable that following Mr XXX’s death the council have refused to pay a death grant and widow’s pension. You request the immediate payment of these benefits.

5. The Appointed Person determined that “Although XXX Limited had been inadvertently deducting LGPS contributions from his salary since he commenced employment with the Company in April 1998, Mr XXX was not eligible to be a member of the LGPS either then or at any time during the succeeding period up to his death on 14 September 1999. Consequently, I must agree with the Pensions Manager that death in service lump sum and pension benefits are not payable from the XXX Council LGPS Fund following your late husband’s death.”

6. The Secretary of State in reaching his decision has had regard to the regulations, which, in his view apply. During the period of Mr XXX’s employment with the company from 14 April 1998 the 1997 regulations were in force and it is to these regulations the Secretary of State has had regard.

7. Regulation 129(2) of the 1997 regulations states that every employee of a passenger transport company to whom a resolution under regulation 4 of the 1986 regulations has effect is deemed to be in employment with the body which passed the resolution. The Secretary of State notes that XXX Council passed such a resolution on 21 October 1986. That resolution states “Every qualified employee (as defined in regulation 4(2) of the Local Government Superannuation (Miscellaneous Provisions) Regulations 1986) of XXX Limited, the company formed by the … Council under regulation 67 of the Transport Act 1985, shall, for the purposes of the Local Government Superannuation Regulations 1986, be deemed to be employed by XXX Council as the transferring body.”

8. The Secretary of State notes that XXX Council transferred staff to the company with effect from 26 October 1986.

9. The Secretary of State notes that regulation 4(2) of the 1986 regulations defines who must be considered a qualified employee for the purposes of XXX Council’s resolution of 21 October 1986. Regulation 4(2) states a qualified employee is one who during a period ending no earlier than 12 months before the start of his employment with the company was in an employment with the transferring body in which he was a pensionable employee. The Secretary of State takes the view that the clear intention of regulation 4 of the 1986 regulations was to allow employees who were transferred from council employment to the employment of a newly established passenger transport company to remain in the Local Government Superannuation Scheme (LGSS) (as the LGPS was known prior to 2 May 1995). He takes the view that to be a qualified employee under the provisions of the 1986 regulations a member would have had to have his employment transferred from XXX Council to the company at that time.

10. The Secretary of State’s view is fortified by the Department of Transport’s Circular, dated 6 December 1985, reference 4/85, which states “Regulations will be made to allow the Executive or authority…to deem that transferred staff remain its employees for the purposes of the Local Government Superannuation Scheme (LGSS). This has been called the “deeming option” and its adoption would mean that all transferred staff would remain members of the LGSS while the company was wholly owned by the parent authority. It would not, however, apply to new recruits.”

11. The Secretary of State’s view is further fortified by Appendix D of the Department of the Environment’s Circular, dated 21 March 1986, reference 9/86, which states “[the 1986] … regulations have three separate objectives, viz: (b) Regulations 4, 5 and 6(b) and (c) provide that … district councils with bus undertakings may resolve that employees transferred to the public transport companies … set up under the Transport Act 1985 are to be treated for superannuation purposes as employees of the … district council… .”

12. The Secretary of State notes that Mr XXX was not transferred from XXX Council to the company in October 1986. He notes Mr XXX resigned from his council employment with effect from 10 April 1998. He also notes Mr XXX voluntarily took employment with the company from 14 April 1998. The Secretary of State notes, therefore, that Mr XXX was not the subject of a transfer from XXX Council to the company.

13. The Secretary of State notes that the company are not a scheme employer or a resolution body, nor are they subject to an admission agreement under the 1997 regulations. He notes that insofar as the company’s employees were entitled to remain in the LGSS when they transferred into the company, their scheme employer for the purposes of the regulations was deemed to be XXX Council. The company does not, therefore, have any powers under the 1997 regulations to make decisions relating to the LGPS. The Secretary of State concludes therefore that the company had no power to decide that Mr XXX should be admitted to the LGPS.

14. The Secretary of State takes the view that Mr XXX was not a qualified employee for the purposes of the 1986 regulations and therefore XXX Council’s resolution of 21 October 1986 did not apply to him. He also notes that the company had no power to make any decisions relating to the LGPS. He concludes that Mr XXX, therefore, was not entitled, under the provisions of the 1997 regulations, to be a member of the LGPS for the period of his employment with the company; therefore there is no entitlement to any benefits including a death grant and spouse’s pension.

15. The Secretary of State is extremely concerned that the company have caused this situation to arise. He considers that it may be appropriate for you to seek information relating to the appeals process for the occupational pension scheme which the company have in place for their employees. The company took a decision that they had no authority to take to admit Mr XXX to a pension scheme which he was not eligible to join. The Secretary of State takes the view that in so doing, the company effectively may have failed to admit Mr XXX to their own company pension scheme which he may have been eligible to join when he started employment with them. The Secretary of State is not aware of the rules that apply to the company’s pension scheme, but you are entitled to seek advice and assistance from OPAS on this matter.