SUPERANNUATION ACT 1972

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997(the 1997 regulations)

1. I refer to your letter dated 25 September 2000 in which you appeal (under regulation 102 of the 1997 regulations), against the decision of xxxxxx, the appointed person for xxxxxx (the council), in relation to your local government pension scheme (LGPS) dispute with the council.

2. The Appointed Person found that the payments you received for carrying out election duties cannot be included in your final pensionable pay for the purposes of calculating your LGPS retirement benefits.

3. The question for decision: The question for decision by the Secretary of State is whether the payments you received for election duties constitute pay under the 1997 regulations.

4. Secretary of State’s decision: The Secretary of State has decided that your payments for election duties do constitute pay for the purposes, subject to the payment of contributions, of calculating your pensionable pay.

5. The Secretary of State upholds your appeal. His decision replaces that made by the Appointed Person.

6. The Secretary of State’s reasons and the regulations that 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 the Pensions Ombudsman.

7. This completes the second stage of the internal resolution disputes procedure. The Pensions Advisory Service (OPAS) is available to assist members and beneficiaries in connection with difficulties they failed to resolve. Their address is 11 Belgrave Road, London, SW1V 1RB (telephone number 020 7233 8080).

8. The Pensions Ombudsman may investigate and determine any allegation of maladministration or any complaint 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 number 0207 834 9144).

9. Copies of this letter have been sent to the council and the Appointed Person.

10. EVIDENCE RECEIVED

1. The following evidence has been received and taken into account:

a) from you: letters dated 6 February 2000, 25 September 2000 (with enclosures), 31 October 2000 and 29 November 2000 (with enclosures);

b) from the Appointed Person: letter dated 16 October 2000 (enclosing copies of documents considered by him) (list enclosed with the Department’s letter dated 26 October 2000); and

c) from the council: letters dated 7 November 2000 (with enclosures) (copies enclosed with the Department’s letter dated 10 November 2000) and 30 October 2000.

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 dispute 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 as Assistant Head of Administrative Services in the Chief Executive and Director of Finance Department;

b) your job description included the requirement “Elections control and co-ordination”;

c) you received payments for undertaking election duties;

d) you ceased employment with the council after 1 April 1998;

e) the council decided that the payments you received were not pensionable;

f) your appeal against the council’s decision was originally considered and dismissed by the then Chief Executive on 13 May 1999;

g) you appealed to the Secretary of State against the council’s decision and on 2 February 2000 he decided that the council must refer the matter to a further, independent, Appointed Person; and

h) your appeal was considered and dismissed by the Appointed Person in his letter dated 27 March 2000.

4. You maintain that no contract existed between you and the acting/returning officer and that your contract of employment with the council included a provision that you would be assigned to election duties. You consider, therefore, that if you had refused to undertake the election functions you would have been in breach of your contact of employment with the council. You consider that payments made to you for those functions were contractual overtime payments and should therefore be included in your pensionable remuneration used to calculate LGPS benefits. You maintain that at no time did you receive payments from the acting/returning officer’s own money or from his gross or net election fees.

5. The council contend that you were remunerated for your elections control and co-ordination function by your salary, and the duties undertaken at elections were additional separate appointments under the direction of the Acting/Returning Officer.

6. The Appointed Person decided that “The additional payments you have received for election duties have been made by the Acting/Returning Officer as your employer, and not by the … Council. This is borne out by his appointment of you as Deputy Returning Officer for Parliamentary elections under section 28(5) of the Representation of the People Act 1983, and for council elections by the other evidence provided; and… As the payments are not therefore in respect of your employment as Assistant Head of Administrative Services with the … Council they cannot be included in your pensionable earnings or in the calculation of your final pay for determining the retirement benefits to which you became entitled when you ceased employment in January 1999. Furthermore, as you would expect the Acting/Returning Officer is not an employer listed in Schedule 2 to the 1997 regulations for the purposes of the Local Government Pension Scheme.”.

7. The Secretary of State in reaching his decision has had regard to the regulations which, in his view, apply. When you ceased working for the council the 1997 regulations applied. Your pensionable pay would have been calculated by reference to regulation 20. This refers to benefits being calculated from your final pay. Pay is defined in regulation 13. The definition includes “all salary, wages, fees and other payments paid to him for his own use in respect of his employment.”. Regulation 13(1)(c) allows other payments to be made pensionable if they are specified as such in a contract of employment. Certain payments are specifically excluded (as listed under regulation 13(2)) such as “payments for non-contractual overtime”. Furthermore under regulation 13(10) no sum can be treated as pay unless income tax liability has been determined on it. Regulation 132 provides how duties of returning officers and acting returning officers are to be treated under the LGPS. However, the 1997 regulations are silent on the role of supporting officers and their duties.

8. The question the Secretary of State has to decide therefore is whether payments were a) paid to you; b) for your own use; c) in respect of your employment; and d) not excluded under the specific exceptions in regulation 13(2) or (10). If the payments meet all these criteria, they constitute pay. If they fail on any of these counts, they do not.

9. There is no disagreement that payments were made to you. It also appears that you were permitted to, and did, keep them. There appears to have been no obligation enforced on you to pay them into the council’s general fund, and no expectation that you would disburse them to other officers. The Secretary of State therefore concludes that they were, in practice, for your own use.

10. The Secretary of State has considered whether they were paid in respect of your employment. He has first considered the source of the payments. He notes that the 1997 regulations do not state that payments under regulation 13 must be paid by the employer, or from a specific account. The regulation is worded to catch a variety of payments. Provided they are paid to you for your own use and in respect of your employment, the source of the payments is not a factor. Nor do the regulations suggest that payments in addition to salary are excluded; it is clear to the Secretary of State that the various payments covered by regulation 13 are not mutually exclusive alternatives. In addition, having weighed up all the evidence, the Secretary of State believes that the payments were sufficiently established and formalised that they were not so arbitrary, random or discretionary as to be regarded as a gift.

11. The Secretary of State takes the view that “in respect of your employment” refers to an LGPS employment whose duties you were contractually required to undertake by the council as one of its officers. Your contract of employment with the council has not been presented in evidence. A certificate (on council paper) of your appointment for specific elections, signed by the Acting/Returning Officer and by you, has been provided. The council maintain that you were employed by the Acting/Returning Officer on the duties for which you were given additional payments; you maintain that you had no contract with the Acting/Returning Officer and were employed by the council. It is not clearly stated in formal documents what specific duties the additional payments were made for. However reference has been made to “counting officer” and “verification superviser” from certificates of pay signed by you and dated 18 June 1999 in respect of European Parliamentary Elections. In any event, the evidence presented suggests that the parties accept that the payments were made for election duties.

12. The question therefore is whether the election duties for which these payments were made formed part of your employment. The Secretary of State notes the council’s contention about your employment status. While accepting that you may have been formally appointed by the Acting/Returning Officer as deputy, the Secretary of State does not consider that this conclusively establishes that you were employed by him and not by the council on the election duties for which you were paid the additional sums. The Secretary of State considers it appropriate to have regard to your job description, in considering whether your election duties formed part of your council employment. He notes that your job description included “elections control and co-ordination”. He notes the council’s view that this was taken into account in the grading and salary for your post and that the duties for which you were paid extra were separate additional appointments by the Acting/Returning Officer. This view seems to be supported by the Appointed Person. The Secretary of State does not agree. He finds that no evidence has been presented to support this contention by showing that other officers of the same grade who were not paid extra had a similar requirement in their job description. The council have not demonstrated what duties they consider “elections control and co-ordination” is intended to cover, nor precisely what duties you carried out that are not, in their view, caught by this requirement in your job description. It seems to the Secretary of State that the requirement in the job description simply does not address the duties performed in sufficiently specific a way as to expressly include or exclude particular tasks. In his view the requirement in the job description is so wide-ranging that the term “elections control and co-ordination” cannot reasonably be held to exclude performance of particular tasks which you carried out at elections. On the evidence presented he inclines to the view that the job description was intended to cover all the tasks which you had to perform to help ensure that elections were properly carried out. If the council had intended to exclude certain tasks, they should have defined more closely in the job description precisely what duties were included, and clearly dealt with the status of the potential additional payments in your contract of employment. It appears they did neither, and the Secretary of State finds their subsequent arguments unconvincing. In the Secretary of State’s view the duties were “in respect of your employment.”.

13. The Secretary of State has considered the exclusions in regulation 13(2). He notes you regard the payment as, effectively, overtime. He does not necessarily agree. However, since they were paid for contracted duties he would not in any event consider them to be non-contractual overtime, nor has the council argued that they are. He finds they are not excluded under regulation 13(2).

14. Last, the Secretary of State has considered regulation 13(10). It is accepted that income tax liability has been determined on the payments. An argument has been advanced about the rate of tax deducted, at basic rather than higher rate, in support of the council’s case. The Secretary of State considers this is a matter between the Inland Revenue, you and the council. He concludes that your additional payments do constitute pay for the purposes, subject to the payment of contributions, of calculating your LGPS pensionable pay.