815      INDEX

Our Ref: LGR 85/18/345

 

6 November 2000

 

 

LOCAL GOVERNMENT PENSION SCHEME APPEAL

 

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997(the 1997 regulations)

 

1)      I refer to your letter of 25 August 2000 in which you appeal (under regulation 102 of the 1997 regulations) to the Secretary of State for the Environment, Transport and the Regions on behalf of Mr XXX against the decision of Mr XXX, the Appointed Person for XXX (the council), in relation to his Local Government Pension Scheme (LGPS) dispute with the council.

 

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

 

3)      The Appointed Person found that the Long Service Award made to Mr XXX by the council “… should not therefore have been made and consequently should not have been included within the final pay figure used to determine 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 question for decision: The question for decision by the Secretary of State is whether the Long Service Award payment can be included in Mr XXX’s pensionable remuneration which is used to calculate his LGPS benefits. 

 

5)      Secretary of State’s decision: The Secretary of State has decided that the Long Service Award is not part of Mr XXX’s pensionable remuneration used to calculate his LGPS benefits.  The following paragraphs explain why.

 

6)      You maintain that the Secretary of State decided that the payment of the Long Service Award was unlawful.  The Secretary of State is aware, however, that the council reduced Mr XXX’s pension because, in their letter of 8 May 2000, they considered the payment of the Long Service Award to be unlawful.  This is because in their view its purpose was to enhance pensionable pay in Mr XXX’s last year of service for the sole purpose of boosting his pension.

 

7)      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 lawfulness 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.

 

8)      The Secretary of State accepts 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 Mr 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 Mr XXX’s pension, and the subsequent need to withdraw it and reduce his pension, may well amount to maladministration in relation to his pension.  However, even where maladministration has led to financial loss or injustice the Secretary of State has no powers to award compensation. 

 

9)      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 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.

 

10)   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).

 

11)   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).