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 of 14 September 2000 in which you appeal (under regulation 102 of the 1997 regulations) to the Secretary of State for the Environment, Transport and the Regions against the decision of Mr XXX, the Appointed Person for the XXX Council (the council), in relation to your local government pension scheme (LGPS) dispute with XXX Fund (the fund).

2. The question for decision: The questions you referred to the Secretary of State were whether the fund acted properly in abating your annual compensation and whether there has been maladministration by the fund in relation to your pension.

3. Secretary of State’s decision: The Secretary of State cannot consider the abatement of your annual compensation as this award is not made under the provisions of the LGPS regulations. He finds no evidence of maladministration by the fund which has caused you financial loss or injustice. In any case, the Secretary of State has no powers to award compensation in cases where claims of maladministration are made with regard to the LGPS even where this has led to financial loss or injustice.

4. The Secretary of State’s dismisses your appeal. His decision has a similar effect to that made by the Appointed Person.

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

6. The Secretary of State 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.

7. 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).

8. 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: letters dated 14 September 2000 (with enclosures) and 22 October 2000;

b) from the Appointed Person: letters dated 5 October 2000 (enclosing copies of the documents considered by him)(list enclosed with the Department’s letter dated 18 October 2000) and 9 November 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 submitted the following points have been noted:

a) you were employed by the council until 2 April 1995 when your employment was terminated on the grounds of redundancy;

b) when your employment with the council was terminated you were awarded a 7 340/365 years credited period (commonly known as compensatory added years);

c) your LGPS retirement benefits were paid to you from 3 April 1995;

d) you were re-employed by the council from 28 October 1996 until 5 March 2000; and

e) during your re-employment your pension was abated.

4. The Appointed Person determined that “From the information gathered during my investigation, I find your benefits have been calculated correctly in accordance with the Local Government Pension Scheme Regulations 1997, and that the abatement to your Compensatory pension has been calculated correctly in accordance with Regulations 17 and 18 of the Local Government (Discretionary Payments) Regulations 1996. In view of this I am afraid I cannot uphold your appeal.”

5. You maintain that the council made promises to you which the fund later “went back on arbitrarily.” You consider that you were provided with incorrect information. You state that you were shocked by the way the pension fund took action to recover overpayments without apology or explanation. You ask whether the council have a duty of care and best advice. You ask whether you have paid superannuation for nothing. You ask whether you have lost out on SERPS. You state that the Appointed Person, in his decision letter dated 9 August 2000, stated that maladministration may have taken place.

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 in relation to your compensatory added years has been included with your local government pension. Such awards may be subject to abatement but they are separate from the LGPS. The Secretary of State notes that the awards was made under the provisions of the Local Government (Compensation for Premature Retirement) Regulations 1982 (the 1982 regulations), which were replaced by the Local Government (Discretionary Payments) Regulations 1996 with effect from 25 July 1996. The Secretary of State does not have powers to consider disagreements arising under the Local Government (Discretionary Payments) Regulations 1996. The Secretary of State notes that the Appointed Person has considered whether the abatement applied by the council in respect of your compensatory added years was correct. The Appointed Person also had no powers to consider this question under the dispute resolution provisions of the 1997 regulations. However, the Secretary of State accepts that an employer may well decide that they should or are required to have a procedure for considering disputes about awards made under the provisions of the Local Government (Discretionary Payments) Regulations 1996, and it is for them to decide how to organise such a procedure and who should carry it out.

7. The Secretary of State notes that you ask whether you have lost out on SERPS. The LGPS is a contracted-out scheme. That means it is contracted out of SERPS. But in order to meet the Department of Social Security (DSS) and Inland Revenue limits it (the LGPS) guarantees to provide benefits at least to the value of the state scheme. As a member of a contracted-out scheme you would have paid lower national insurance contributions and have received tax relief on your scheme contributions.

8. You ask whether you paid superannuation for nothing. The Secretary of State notes that you contributed during two separate periods of LGPS membership. He notes that it appears you are in receipt of pension benefits in relation to both periods.

9. The Secretary of State in reaching his decision has had regard to the regulations, which, in his view apply. At the time your employment was terminated on the grounds of redundancy on 2 April 1995 the 1986 regulations were in force. The 1986 regulations require a member’s benefits to be reduced, in certain circumstances if a member started working for a “scheduled body.” Your LGPS pension benefits in relation to your employment which ceased on 2 April 1995 were awarded under the provisions of the 1986 regulations. The 1995 regulations replaced the 1986 regulations from 2 May 1995 and similar provisions applied (Schedule D5, Part 1). Therefore, it is the 1995 regulations to which the Secretary of State has had regard. The 1997 regulations apply to individuals who were contributing members of the scheme on 1 April 1998. The 1997 regulations do not apply in this case, with the exception of the common provisions, as although you were a contributing member of the LGPS on 1 April 1998 your dispute relates to an earlier period of membership and you ceased being a contributing member in relation to this period on 2 April 1995. In the 1995 regulations reference is made to a LGPS employer rather than a “scheduled body”; “scheduled body” includes local authorities as does “LGPS employer”.

10. The Secretary of State notes that you do not dispute that the fund informed you, following the termination of your employment on 2 April 1995, that if you were subsequently employed by a “LGPS employer” your pension would be reduced. He notes that you started employment with the council on 28 October 1996 and the fund wrote to you on 22 November 1996 explaining how your pension would be reduced by £314.91 per annum for the period of your re-employment. The Secretary of State notes that you do not dispute that the abatement applied to your pension (as opposed to your compensatory added years) was correct.

11. The Secretary of State notes that you appear to contend that information supplied to you prior to the termination of your second period of employment with the council was incorrect. He notes you have not specifically stated what information you believe is incorrect. The Secretary of State cannot be expected to consider this since you have not stated what information you consider is incorrect.

12. The Secretary of State notes that you have stated that the Appointed Person stated, in his decision letter dated 9 August 2000, that there may have been maladministration in relation to your case. He notes that the Appointed Person merely states that “…I am unable to investigate allegations of maladministration. If you feel that maladministration may have taken place, then the Pensions Ombudsman will usually make a decision on this….”

13. In the Secretary of State’s view you have provided no clear and conclusive evidence of maladministration which caused you financial loss or injustice. Like the Appointed Person the Secretary of State has no powers to award compensation in any event.

14. Under the 1997 regulations the fund have a duty to administer the pension fund although there is no specific provision for the fund to recover overpaid benefits or the way such benefits are to be recovered. In such circumstances the Secretary of State does not have the power to intervene or to take a view on the method or procedure to be used to recover any overpayment.