Local Government Pension Scheme Appeal Determination By The Secretary of State

Our Ref: LGR 79/1/1513 480 INDEX

Date: December 1998

LOCAL GOVERNMENT SUPERANNUATION ACT 1953 (“the 1953 Act”)

SUPERANNUATION ACT 1972

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1972 (“the 1972 regulations”)

LOCAL GOVERNMENT SUPERANNUATION REGULATIONS 1986 (“the 1986 regulations”)

LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 (“the 1995 regulations”)

1. I am directed by the Secretary of State for the Environment, Transport and the Regions to refer to your notice of appeal submitted under regulation J5 of the 1995 regulations against the decision of XXX County Council (“the council”) not to award you a pension as a member of the local government superannuation/pension scheme (“the scheme”).

2. The appeal has been conducted by correspondence. Consideration has been given to your letter received on 4 March and your letter of 15 August 1996; the council’s letters of 9 May and 27 August 1996, and 26 September 1997 and 3 July 1998 and to all copy documents enclosed with those letters.

3. The question for determination is whether you are entitled to a pension under the scheme and whether the council are required under regulation J14 of the 1974 regulations to grant you a gratuity.

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

(a) from 1968 you were employed by XXX City Council (“XXX”) working less then 30 hours per week;

(b) on 1 April 1974 you were transferred to the council;

(d) in 1985 you were re-employed by the council working 19 hours per week;

(e) on 30 January 1996 you ceased your second period of employment with the council; and

(f) in March 1986 you appealed to the Secretary of State against the council’s decision not to pay you a pension.

These facts have been agreed by the parties to the appeal.

5. You contend that it was your understanding that you were entitled to a frozen pension for your first period of service. The council contend that you did not opt to join the scheme and were only deemed a pensioner on 2 May 1995 when membership of the scheme was made automatic. They further state that you were not entitled to a gratuity under a resolution passed by XXX because you had a break in service before reaching the age of 60.

6. 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.

7. It is not disputed that on both occasions when you started local government employment you were a part-time employee and not eligible to join the scheme. Part-time employees became eligible to elect under the 1986 regulations to become pensionable employees with effect from 1 April 1986. These regulations are quoted below in so far as they are relevant to your appeal. Regulation B1A states the following:

“B1A(1) ... a person who was not a pensionable employee on 5th April 1988 ... shall not after that date become a pensionable employee unless he makes an election to become such.

(2) An election under paragraph (1) shall be made by notice given in writing to the body which is to become the person’s employing authority.”

Part IV of schedule 2 provides as follows;

“1. - (1) Subject to sub-paragraphs (2) ... a person who is in a qualifying part-time employment is a pensionable employee in that employment.

(2) ... a qualifying part-time employment is -

(a) an employment under a scheduled body,

(b) and (c) ...

in which the contractual weeks are 35 or more and the contractual hours are 15 or more but fewer than 30.”

8. When the Local Government Superannuation (Miscellaneous Provisions) Regulations 1987 (“the 1987 regulations”) which made part-timers eligible to elect were introduced the council had a duty to ensure that you were notified of this entitlement. You have not argued that you were not informed of your right to join and it has not been shown that you elected to join the scheme. The council have shown that part-time staff in general were notified of these changes to the 1986 regulations giving them the opportunity to join the scheme.

9. With the introduction of the 1995 regulations membership of the scheme became automatic. As far as is relevant these regulations are quoted below. Regulation B10 states the following:

“B10.-(1) ...

(2) ... an employee is deemed to have made an application to become a member, unless-

(a) before commencing his employment, or

(b) in the case of a person to whom this paragraph began to apply after he commenced his employment, before the date on which it began to apply to him,

he notified his employer in writing that he did not wish to become a member of the Scheme.”

When you last ceased local government employment entitlement to pension was provided by Part D:

“D3. For the purposes of these regulations, a person has a “statutory pension entitlement” if-

(a) his total period of membership is not less than two years ...

(b) ... ”

Therefore you were not entitled to a pension either under the 1995 regulations having been a member of the scheme for less than two years. As far as the 1986 regulations are concerned, in the absence of conflicting evidence, the Secretary of State adheres to the presumption that the law in force at the time was complied with. He therefore takes the view that you did not opt to join the scheme when notified of the changes introduced by the 1987 regulations.

10. Consideration must next be given to the questions surrounding the award of a gratuity.

11. When you were employed by XXX you were entitled at the discretion of the council as a non-pensionable employee to a gratuity on retiring by virtue of the terms of a resolution passed by XXX under the 1953 Act. As far as is relevant the 1953 Act states the following:

“18.-(1) Any local authority may grant to any employee on his ceasing to be employed by them ... a gratuity ...

Provided that-

(i) ...

(ii) this subsection shall not apply in the case of a contributory employee or local Act contributor who is entitled to any payment out of the superannuation fund other than a return of contributions.”

Essentially the XXX resolution permitted payment of gratuities on reaching the age of 60 subject to completing ten years service without a disqualifying break of twelve months. On transferring to the council you retained this entitlement even though the council had not passed a resolution providing for similar rights to its own non-pensionable employees. The 1974 regulations made it the duty of the council to provide your entitlement to a gratuity. As far is relevant part J of the 1974 regulations stated as follows:

“J14.- Where immediately before a transferred employee is transferred it is the prevailing practice of the body employing him, in relation to employees of that description, to exercise beneficially (that is to say, to secure the payment of gratuities, allowances or pensions, or of increased pensions or lump sum benefits) any discretionary power exercisable by them by virtue of any enactment relating to pensions, it shall be the duty of the new employing body in relation to the transferred employee, if he has continued in their employment, to exercise corresponding power under these regulations or any other enactment relating to pensions for the time being in force in a way which is not less beneficial than the general character of that practice and Part H shall apply to any question arising under this regulation ... ”

Although under regulation J5 of the 1995 regulations the Secretary of State cannot, “determine any question that fell to be decided by the relevant employer in the exercise of a discretion”, the Secretary of State takes the view that the duty placed on the council by regulation J14 and part H permit him to consider this part of the appeal. Therefore, it falls for him to consider your entitlement to a gratuity.

12. It is not disputed that the continuity of your local government employment was broken in 1980 when you ceased employment with the council before reaching the age of 60. Although the 1953 Act states that qualification for a gratuity is, “on ... ceasing to be employed”, the council have asserted that gratuities were not treated in this way. They state that XXX City Council’s original resolution covered only people who remained in their employment until age 60 (women) or 65 (men). They never operated a deferred entitlement for those leaving before that age, and service before a break in excess of 12 months was not included in a gratuity calculation. The Secretary of State notes that the effect of this is that you do not qualify for a gratuity because you had a break in service of more than 12 months in 1980 before you reached the age of 60. The council exercised their discretion at the time not to grant you a gratuity, and the Secretary of State is not empowered to determine that this should be overturned.

13. The Secretary of State therefore determines as above and dismisses your appeal.

14. A copy of this letter has been sent to the council.

15. Having made his determination the Secretary of State has no power to alter it but you may refer the matter to the Pensions Ombudsman or to the High Court. Because of this, officials may not discuss the case further. The Pensions Ombudsman may investigate and determine any complant or dispute of fact or law in relation to the local government pension scheme. His address is: 11 Belgrave Road, London SW1V 1RB.