Contact: David Wilson, ext 7407

1. Introduction

1.1 This report summarises guidance published by the Office of the Deputy Prime Minister (ODPM) on the implementation of the revised regulations governing the resolution of disputes between Local Government Pension Scheme (LGPS) members or their beneficiaries and their employers or the Scheme administrator. Such disputes could be over the right to a benefit, the level of benefit awarded, the use of a discretionary power, or the interpretation of the rules of the Scheme. These amended regulations come into effect on 1 June 2004, by which time new procedures must have been agreed and in place.

1.2 It also outlines proposals for implementation of the new arrangements for employees of Hampshire County Council, and, in the case of the second stage, all members of the Fund.

2. Policy and legislative background

2.1 The Government's general policy is that an internal dispute resolution procedure should act as "a filter to ensure that easily resolved complaints and simple misunderstandings are not referred to the Pensions Ombudsman". It follows that the ODPM would prefer that, wherever possible, all disputes should be resolved informally.

2.2 Until 31 May the governing regulations will be the Local Government Pension Scheme Regulations 1997. These are now being amended by regulations 27-32 of the Local Government Pension Scheme (Amendment) Regulations 2004 to implement the new arrangements from 1 June 2004.

3. Current arrangements

3.1 Currently, any dissatisfied member is encouraged to raise the complaint informally and then through the Complaints Officer. If a member is still dissatisfied, then the formal process begins.

3.2 For those still dissatisfied there is a three-stage formal process for dealing with pensions disputes. The first stage of all appeals (regardless of employer) is heard by the County Council's Pensions Appeals Panel. If they are still not satisfied appellants can then appeal to the ODPM at the second stage. The third stage is a final appeal to the Pensions Ombudsman.

4. The new arrangements

4.1 From 1 June 2004, the ODPM's involvement will cease. However, there will still be three stages, if cases cannot be resolved informally. The first two stages will be heard locally as described below. The Pensions Ombudsman's role at the third stage will be unaffected. The arrangements suggested below should be considered bearing in mind that there are currently very few cases that need to be considered formally. In the four years to March 2004, there were only eight formal appeals by County Council staff.

The first stage

4.2 This will normally be the responsibility of the appellant's employer, or the administering authority, depending on who made the initial decision. The appeal must be referred to a "specified person". This can be the person or body that made the initial disputed decision, or another officer or group.

4.3 The County Council has a dual responsibility under the LGPS. It acts as both an employer and administering authority.

4.4 There are a number of possibilities when considering how the County Council should exercise its responsibilities as employer under the first stage. Examples would be a pensions manager, a solicitor, payroll manager or head of personnel, or other nominated individual or group. It is proposed that, in cases where the appeal is against a decision by employing departments, the specified person should be the County Treasurer or a nominee (who would be a member of the Treasurer's Management Team), who should chair a Panel with two other officers: a legal officer from the Chief Executive's Department and the chief officer of the department making the decision, or his/her nominee. This should not be onerous or disruptive as there are normally very few cases. The involvement of two officers independent of the department making the original decision should ensure that the process is seen to be impartial. It will also provide continuity, enabling the two permanent members to build up an appropriate level of expertise.

4.5 However, in cases where the appeal is made against a decision made by the County Council as administering authority ( ie by Pensions Services staff), it is proposed that the specified person in all cases will be a member of the Treasurer's Management Team. This seems appropriate, mainly because management team members will not have made the original decision, but will normally be close enough to the administration of the Scheme to be able to obtain information as required and make an informed judgement.

4.6 Once a written appeal has been submitted to the specified person, that person must issue a written decision on the appeal within two months, or longer provided a clear explanatory letter is sent warning of a delay and a revised deadline for decision. If the specified person is uncertain about any aspect of the appeal, he/she can seek further advice and clarification from the interested parties and others. In particular, no ill health decisions can be made unless a certificate of incapacity or otherwise to work up to age 65 is obtained from an independent medical practitioner qualified in occupational health.

4.7 Written decisions by the specified person must be clearly stated and include:

· Details of the decision

· The legislative basis for that decision

· Notification of the appellant's right to take the appeal to the second stage

· Notification of the appellant's right to seek assistance from the Occupational Pensions Advisory Service (OPAS)

4.8 If the appellant accepts the specified person's decision, it is binding on the employer.

4.9 The County Treasurer has written to the other employers in the Fund advising them of the need to set up their own arrangements for this stage.

The second stage

4.10 If the appellant does not accept the decision made after the first stage, he/she can appeal to the County Council as administering authority. The appellant can also refer the case if the specified person has failed to come to a decision on the original appeal after three months, or a month after the revised date quoted in any interim letter. The County Council can delegate this second-stage function, and the ODPM advises that the decision-makers at this stage should be conversant with the LGPS rules and have had no previous involvement with cases to be considered. It is suggested that the Pensions Appeals Panel, which is currently responsible for the first stage, could be made responsible for this second stage in the new process.

4.11 All the information supplied to the parties at the first stage and a copy of the decision must be passed to those responsible at this second stage. The appellant must also set out the reasons for being dissatisfied with the employer's decision.

4.12 The County Council must carry out its review in a formal way and look at the issues in detail. Advice can be taken as appropriate when necessary. As with the first stage, a decision must be made within two months of the appellant's referral, unless an interim letter of explanation is supplied quoting a revised deadline date.

4.13 When a decision has been made, the parties must be informed in writing in the same way as set out in paragraph 4.7. The appellant should also be informed that they can take the matter to the Pensions Ombudsman if they wish.

Recommendations

1 That the Panel approve the proposed new arrangements for the resolution of pension disputes for County Council cases, and, at the second.stage, all Fund members.

2 That the remainder of this report be noted.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

TITLE FILE

None.