Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR85/18/

5 November 1999

THE LOCAL GOVERNMENT(DISCRETIONARY PAYMENTS) REGULATIONS 1996 (the 1996 regulations)

1) I refer to your letter of 30 October 1999 in which you appeal to the Secretary of State for the Environment, Transport and the Regions about how your former employer, XXX (the council), dealt with your redundancy in so far as what you term “additional years pension entitlement” is concerned. You explain that the council did not award you added years. From the evidence available it appears that the matter you referred to the council’s Appointed Person was whether added years should have been awarded. You further explain that you have been advised by the council that you have exhausted the avenues open to you under the Internal Disputes Procedure and that your only further recourse is to appeal to the Secretary of State.

2) The Secretary of State has no powers to consider your complaint. The following paragraphs explain why.

3) You believe that the Local Government Pension Scheme (LGPS) allows employers discretion to award added years to staff over the age of 50 who take redundancy retirement. You consider that “It was an established procedure – understood and accepted by directors, union representatives, and staff – that subject to the usual issues of length of service etc., staff made redundant over the age of 50 were entitled to added years. The only variable was whether those entitled to maximum added years took 10 years or 6 & 2/3rds years with an adjustment to their lump sum payment.”.

4) It is noted from the papers attached to your letter that the document dated 18 October 1993 states “The Authority will use its discretion to give maximum enhancement of Superannuation benefits by giving “added years” ...” and that “Employees may opt to restrict the enhancement to 6 2/3 years as the Superannuation Regulations lead to a diminution of the lump sum retirement allowance where more than 6 2/3 added years are granted.”. It is further noted that in the document headed “XXX’s policies/contractual terms regarding redundancy & related payments” refers to “other non contractual schemes for enhancing redundancy payments that are currently in force” and “The Authority will generally use its discretion to grant “added years” up to the maximum enhancement of service allowed”.

5) Prior to 1 April 1997 there was no power under the local government pension scheme regulations to award enhanced periods of membership. With effect from 1 April 1998 such a discretionary provision was introduced, but it is limited to a maximum award of 6 2/3years. It appears from the evidence available, therefore that your complaint is not about an award under the LGPS regulations, rather it is about the discretionary award of a credited period (commonly known as compensatory added years) which the council may award under regulation 8 of the 1996 regulations to employees, aged 50 or over, who are made redundant or who cease employment in the efficient exercise of the authority’s functions. Awards of credited periods would not have been made under the rules governing the LGPS, and although they are commonly referred to as “compensatory added years” the award of a credited period does not enhance a person’s membership of the LGPS; nor is the resulting annual compensation payment funded from the pension fund. The 1996 regulations contain no powers of appeal in respect of the discretionary award of compensation.

6) It is noted that in the document 18 October 1993 the council refer “... its discretion to give maximum enhancement of Superannuation benefits by giving “added years”.” Despite this wording the statutory position, as explained above, is that such awards do not enhance a member’s local government pension; furthermore councils have the same discretion to grant such awards to employees who are not members of the LGPS.

7) The Pensions Advisory Service (OPAS) is available to assist members and beneficiaries in connection with difficulties about their pension. Whether they have powers to consider discretionary awards not made under the pension scheme is a matter for them to consider. Their address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 233 8080).

8) The Pensions Ombudsman may investigate and determine any complaint of maladministration, or any dispute of fact or law in relation to the local government pension scheme made or referred in accordance with the Pensions Schemes Act 1993. Whether he may consider a discretionary award not made under the pension scheme is a matter for him to decide. His address is 11 Belgrave Road, London, SW1V 1RB (telephone 0171 834 9144).