SUPERANNUATION ACT 1972

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 ("the 1995 regulations")

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 ("the 1997 regulations")

 

1.         I am directed by the Secretary of State for the Environment, Transport and the Regions to refer to your notice of appeal under regulation J5 of the 1995 regulations against the decision of XXX Borough Council ("the council") on your local government pension scheme ("the LGPS") contributions.

 

2.         The appeal has been conducted by correspondence. Consideration has been given to your letters of 18 January and 7 July 1997; the council letters of 7 April and 8 July 1997; and to all copy documents enclosed with those letters.

 

3.         The Secretary of State takes the view that the question for determination is whether you were entitled to increase your contributions to your Additional Voluntary Contributions ("AVC") scheme and the LGPS to more than 15% of your salary. 

 

4.           From the evidence submitted the following facts have been established:

 

a)  on 3 September 1985 you commenced local government employment with *** ("[the Council]");

 

            b) on 14 May 1990 you became eligible to join the local government superannuation scheme (“the LGSS”), as the LGPS then was, when your weekly working hours were increased from 10 to 15, but you were not given information on your entitlement to join the LGSS;

 

            c)  on 25 March 1995 you elected to join the LGSS;

 

            d)  in June 1995 the council offered you retrospective membership of the LGPS to  14 May 1990 by payment of your outstanding contributions;

 

            e)  you requested to pay your outstanding contributions over the shortest period possible under the 1995 regulations;

 

            f)  on 1 April 1996 you commenced paying your outstanding contributions in instalments;

 

            g) in April 1996 [the Council] was abolished and the council took over the administration of your pension;

 

            h)  you applied to pay further AVC's;

 

            i)  on 19 September 1996 the council wrote advising you to negotiate a longer period for repaying your arrears of LGPS contributions;

 

            j)  on 25 October 1996 the council wrote informing you that you could pay AVC's at the rate of 4.11% from 1 April 1996 to enable you to keep within the contribution limit of 15% and still be able to complete the payment of outstanding contributions before you retire at 60; and

 

            k)  on 18 January 1997 you appealed to the Secretary of State against the council and [the Council]'s decisions which have limited your options to maximise your pension by paying AVCs.

 

5.         You contend that you have lost the option to maximise your pension by paying AVC’s from 14 May 1990 when you were first eligible to join the LGSS and that you wished to contribute AVC's at the rate of 9% of your salary.

 

6.         The council contend that they advised you to reduce your payments of outstanding contributions to allow you to pay AVC's at 4% of your salary.

 

7.         All the representations and evidence submitted have been considered.  The Secretary of State is required to determine the same question as to your rights under the regulations which fell to be decided in the first instance by the council.  He is acting judicially and has no power to modify the application of the regulations to the facts of the case.

 

8.         Limits of contributions to occupational pension schemes approved by the Inland Revenue are now contained in regulation 16 of the 1997 regulations. As far as is relevant this regulation states the following:

                     

  "16.‑(1) ...

            (2)  The total contributions to the Scheme and any other approved occupational pension scheme or approved personal pension scheme by a person in any tax year in respect of any employment in which he is a member must not exceed 15 per cent. of his pay for that year in that employment.

 

            (3)  An occupational pension scheme or personal pension scheme is approved if it has been approved by the Commissioners of Inland Revenue under Part XIV of the Taxes Act."

 

Effectively these provisions replicate those in the 1995 and earlier regulations.

 

9.         It is clear from the above regulation that you cannot increase your total pension contributions to exceed 15% of your salary.  This is a matter governed by the Income and Corporation Taxes Act 1988.  The Secretary of State takes the view that he has no jurisdiction to waive or increase the limit.  However, he notes that the regulations permit the payment of arrears of pension contributions for past membership at a later date, in the form of a lump sum deduction from the retirement grant, rather than in instalments.  This would allow greater headroom within the 15% limit on total contributions for the payment of AVCs.

 

10.       The Secretary of State notes that it is not disputed that [the Council] failed in their obligation to give you information on what choices were available to you when you qualified for membership of the scheme and further options of commencing additional contributions over a longer period were then lost. However allegations of maladministration even where it can be shown that an administrating authority or an employing authority have failed to apply the regulations correctly cannot be considered by the Secretary of State in the context of an appeal under these regulations. He can take into account only the regulations as they stand.

 

11.       In conclusion the Secretary of State therefore allows your appeal in part in that while the 15% limit on total contributions must apply, you can defer payment of your pension contributions in respect of the arrears from 1996 for deduction from your lump sum, thus increasing the headroom for paying AVCs now.

 

12.       The above constitutes the Secretary of State's determination of this case. Having made his determination the Secretary of State has no power to alter it but you or the council may refer the matter to the Pensions Ombudsman or to the High Court. Because of this, officials may not discuss the matter further.

 

13.       The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the local government pension scheme. His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 834 9144).