Section 22 - Guidance for dealing with appeals

Over the course of a Local Government Pension Scheme (LGPS) member’s employment, and after they have left, certain decisions are made that can affect that member’s benefits. Therefore, where decisions are taken, and the member disagrees with them, the law provides that member with the opportunity to challenge the decision, supported by:

Section 50 of the Pensions Act 1995 requires occupational pension schemes, such as the LGPS, to arrange to resolve disagreements between the trustees or managers of the scheme, and one or more persons with an interest in the Scheme.

The relevant sections are:

• Regulation 72 ‐ First instance decisions
• Regulation 73 ‐ Notification of first instance decisions
• Regulation 74 ‐ Application for adjudication of disagreements
• Regulation 75 ‐ Decisions of the adjudicator
• Regulation 76 ‐ Reference of adjudications to Administering authority
• Regulation 77 ‐ Decisions of the Administering authority on reconsideration
• Regulation 78 ‐ Rights of representation
• Regulation 79 ‐ Appeals by Administering Authorities

The IDRP is a formal procedure which is in place to resolve disagreements about decisions taken regarding LGPS pension matters. It forms part of an overall process, where disagreements occur, which can be put simply as:

• Step 1 - a decision is taken that affects benefits (a first instance decision);
• Step 2 - an informal approach to resolving a disagreement about that decision;
• Step 3 - the instigation of the formal, two-stage IDRP (the internal appeal); and
• Step 4 - application to The Pensions Ombudsman for a determination (the external appeal).

Under the LGPS Regulations, both the employer and the administering authority have different decisions to make that could affect member or dependants’ pension benefits. These are called first instance decisions. The lists below show the different decisions that both the employer and administering authority need to make.

Employer’s first instance decisions

• Eligibility for membership;
• Pensionable Pay;
• Final pay;
• Employee’s contribution rate;
• Entitlement to benefit on termination of membership;
• Entitlement to early release of pension benefits; and
• EVERYTHING ELSE! ‐ Regulation 72(4) ‐ ‘A person's Scheme employer must decide any question concerning any other matter relating to the person's rights or liabilities under the Scheme.’

Administering authority first instance decisions

• Any question concerning the person’s previous service or employment;
• Any question about counting additional periods as membership or crediting additional pension; and
• The amount of any benefit, or return of contributions, the member becomes entitled to under the regulations.

Employers and administering authorities when making first instance decisions, are exercising various discretions within the LGPS Regulations.

These Regulations require that you, as an employer, MUST prepare and publish a statement of policy stating how you will exercise some (though not all) of these discretions; not to do so is a breach of your statutory obligations. A list of discretions is shown in Section 7 - Employer discretion policies together with guidance on developing discretions policy statements.

Apart from being a statutory requirement to have a bare minimum published statement, it is good practice to have a comprehensive and regularly updated statement in place. Being able to demonstrate a clear and consistent approach when making first instance decisions is one of the first steps in avoiding challenges to those decisions, and a vital part of defending a position when the matter is escalated.

Providing a clear written explanation of the decision is an obvious and essential part of good administration:

• The grounds for the decision must be included in any notification which states that the person is not entitled to a benefit;
• A notification about a decision on the amount of benefits must show how the benefit is calculated; and
• All notifications must give an address from where further information about the decision can be obtained.

All notifications must include:

• A reference to the right of appeal under Regulations 74 and 76 of the Local Government Pension Scheme Regulations 2013 (the right of appeal under the IDRP);
• Time limits within which those rights may be exercised; and
• The job title and address of the person appointed to whom applications may be made.

You should bear in mind, particularly when the decision results from the exercise of a discretion, that there could be a possibility of a maladministration ruling by The Pensions Ombudsman.

If a member is unhappy with a decision, rather than proceed down the formal IDRP process, it may be better to deal with the matter informally. The member could have a meeting with the body (i.e. their employer) that took the decision, where further details and reasons for the decision could be discussed.

It is important to demonstrate that the decision has been made in a manner consistent with other decisions and in accordance with a clear policy statement. That should help the member to understand why the decision has been reached and that it is ‘nothing personal’.

Any acknowledgement of their concerns, and a deeper understanding of any reasons behind a decision, may satisfy the complainant. Carefully recording your decision making also makes this process much easier.

Sometimes, informal attempts to resolve disagreements fail. The member has a statutory right to then instigate the formal IDRP. Detailed investigations will then need to take place into any decisions made, and the processes involved in reaching those decisions. You can provide the member with the IDRP form.

Who can appeal?

• A member, or a prospective member;
• A surviving spouse of the member;
• A surviving civil partner of the member;
• An eligible cohabiting partner;
• The member’s dependant(s); or
• The member’s representative.

When and why can the applicant appeal?

• The member must appeal within six months of the date they are notified of a decision, or from the date of the act or omission – the Stage 1 adjudicator has discretion to extend this time limit;
• The member has a further right of appeal to Southwark Pension Services if dissatisfied with the adjudicator’s decision; and
• The applicant may appeal against any decision made by an administering or employing authority that affects that member’s rights or benefits under the scheme, or against any other act or omission by these bodies.

The formal internal appeal process is in two stages:

• Stage 1 is looked at by a person who the first instance decision maker, i.e. the employer, has appointed to look at these cases, called the Stage 1 adjudicator; and
• Stage 2 is looked at by Southwark Pension Services.

Stage 1

Where an applicant wishes to appeal, this should be done in writing, with a copy of the decision they wish to appeal against if possible. The Stage 1 appeal is then submitted to the adjudicator.

You, as the employer, MUST appoint a person to consider appeal cases at Stage 1 of the IDRP (the adjudicator). Neither The Pensions Act 1995, nor the LGPS Regulations state who the adjudicator should or might be. However, in practice, as the person will need to understand the details of the dispute, it is likely to be someone with relevant expertise, but have not dealt with any aspect of the case up to this point.

Stage 2

Referrals to Southwark Pension Services against the decision of the Stage 1 adjudicator may be made by the applicant. A disagreement may also be referred in cases where either:

• The adjudicator has failed to issue either a decision, or a letter of explanation, within two months from the date on which the application was made; or
• An interim letter of explanation was sent, but the adjudicator has failed to subsequently issue a decision.

The importance of record keeping

Once investigations reach the formal appeal process, evidence of how and why first instance decisions were reached will be required. It is therefore important that employers keep detailed records of first instance decisions taken, which may include the following (but not limited to):

• Dates of scheme entry;
• Reductions/restrictions in pay;
• Elections to opt-out of, or re-enter the Scheme;
• Breaks in service and elections to pay or not to pay contributions;
• Policy on exercise of discretions, including previous versions and dates of publication;
• Publicity materials, publications and other notifications issued to members and the dates of issue;
• Minutes of meetings to determine eligibility for benefits; and
• Committee reports or minutes on release of benefits or retirement decisions.

Rights of representation

A person who is entitled to make an application under the procedure can nominate a representative to make the application on their behalf. They can use the representative to make a Stage 1 or Stage 2 application. They can also use the representative to continue the appeal.

If a person dies and had a right to make an appeal or had made an application at either Stage 1 or Stage 2, their personal representative may continue the appeal on behalf of the deceased.

If a person who has a right to make an appeal is a minor or is incapable of acting for themselves, the appeal may be made/continued on by a family member or another suitable representative.

If a person who has made an appeal at either Stage 1 or Stage 2, is or becomes otherwise incapable of acting for themselves, the appeal may be made/continued on their behalf by a member of their family or some other suitable representative.

Where a representative is nominated before an appeal is made, the appeal must specify their full name and address and whether that address is to be used for service on the applicant of any documents in connection with the appeal. If the representative’s address is not used in that way, they must nevertheless be sent a copy of any notification of a Stage 1 or Stage 2 decision. If an interim reply was sent at either Stage 1 or Stage 2, the representative must be sent a copy.

A fair and impartial decision

By definition, an internal resolution procedure must be carried out by those responsible for the Scheme; an entirely independent judgement is available through the Ombudsman (see later).

However, the decision must be fair‐minded and impartial having regard to both of the following principles:

• Not representing any party or interest; and
• No previous personal involvement with the case.

Even where the appeal is against a decision that has been taken by Southwark Pension Services, there will always be enough senior officers that have not had any personal interest and who can give an impartial decision without deference to the position of Southwark Pension Services at an earlier stage.

The purpose of the first stage is to carry out a formal review of the initial decision by the authority or body which took that decision.

It is an opportunity to reconsider the question and, where appropriate, to alter the decision if it was not a reasonable one to reach based on the relevant procedures, legislation and evidence (where certain relevant facts or evidence were not taken into account, or where there has clearly been a mistake or oversight, for example).

• Check that the application has been submitted within six months of the relevant date and send an acknowledgement;
• Consider all facts, reports, background information before reaching a determination;
• Request further evidence if necessary;
• The adjudicator must provide a determination within two months of receiving the appeal and issue a copy of the determination to the applicant/representative, the employer, and Southwark Pension Services;
• If not, the adjudicator must write immediately to the member explaining the reason and when a determination will be made; and
• The member may refer the dispute direct to Southwark Pension Services where the specified person fails to make a determination within the prescribed or extended time limits.

Although in most cases the Stage 1 decision will be a final one, there may be circumstances where the adjudicator may wish to issue a provisional decision so that the views of all interested parties, in particular, that of Southwark Pension Services , can be obtained before a final decision is taken. Because the two-month time limit relates to the final decision, a letter of explanation should be sent if the issue of a provisional letter delays the final decision beyond the time limit.

Important points to note

• The adjudicator cannot make a determination outside the provisions of the Regulations;
• The specified person cannot consider cases of alleged maladministration;
• The adjudicator cannot make an award of compensation;
• A right of appeal against a decision on entitlement to a benefit only arises after the earlier of; the date employment ends, or the date specified in a notice to opt-out;
• A successful appeal only applies to that particular case; and
• Unless the applicant refers the decision of the adjudicator to Southwark Pension Services for determination under Regulation 60, the decision reached by the adjudicator is final and binding on the Scheme employer.

Notice of a Stage 1 decision

Within two months of receiving the appeal, written notice of the adjudicator’s decision must be sent to:

• The applicant (and/or his/her personal representative);
• The Scheme employer; and
• Southwark Pension Services.

The decision notice must include the following:

• The question for determination;
• Evidence received and considered;
• The decision;
• A reference to any legislation or Scheme provisions that it relies upon;
• Where relevant, a reference to the Scheme provisions conferring the discretion whose exercise has caused the disagreement;
• A reference to the applicant’s right to have the disagreement reconsidered by Southwark Pension Services, and the time limit for doing this; and
• A statement that The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law and their address.

Referrals to Southwark Pension Services against the decision of the adjudicator may be made by the applicant. A disagreement may also be referred in cases where either:

• The adjudicator has failed to issue either a decision, or a letter of explanation, within two months from the date on which the application was made; and
• An interim letter of explanation was sent, but the adjudicator has failed to subsequently issue a decision.

The person determining appeals at Stage 2 will, in many respects, undertake that function in the same way that the adjudicator did under Stage 1.

The applicant’s complaint must be considered in depth and in a formal way; Southwark Pension Services need to satisfy themselves that the Stage 1 decision was reasonable, had considered all relevant facts and Regulations, was consistent with other decisions reached and that it would stand up to external scrutiny.

Southwark Pension Services should:

• Reconsider the decision taking full account of the facts of the case and any evidence submitted, or relied on, by either party in the determination at Stage 1;
• Check that the Regulations were applied correctly; and
• Check that sound, impartial procedures were used to reach the decision. This is particularly important where the dispute concerns the exercise of a discretion by a Scheme employer or by Southwark Pension Services.

Important points to note

• Southwark Pension Services cannot replace an employer’s first instance decision; it can only instruct the employer to reconsider where discretion is exercised; and
• The decision of Southwark Pension Services is binding and can only be overturned by The Pensions Ombudsman or the High Court. They will not enter into further correspondence in relation to the appeal.

Notice of a Stage 2 decision

Southwark Pension Services must respond to a Stage 2 appeal within the same time limits that apply to Stage 1 appeals (within two months of receipt). A notice of the decision must be in writing and contain:

• The question for determination;
• Evidence received and considered;
• The decision;
• A reference to any legislation or scheme provisions that it relies on;
• Where relevant, a reference to the Scheme provisions conferring the discretion whose exercise has caused the disagreement; and
• A statement that The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law and their address.

Where a member remains dissatisfied after the IDRP has been exhausted, they can seek independent review of their appeal. They can take their case to The Pensions Ombudsman (TPO) provided they do so within three years from the date of the original decision (or lack of a decision) which they are disputing, or within three years of when they first became aware of the problem.

TPO investigates complaints and settles disputes about pension schemes. However, before making a formal complaint to them the member would normally be expected to have progressed through both the first and second stages of the IDRP.

TPO is completely independent and acts as an impartial adjudicator. The role and powers have been decided by Parliament. There is no charge for using their services. TPO cannot investigate matters where legal proceedings have already started but they can settle disputes about matters of fact or law as they affect occupational pension schemes.

It can also investigate and decide upon any complaint or dispute about the maladministration of a pension scheme. Maladministration is about the way that a decision is taken, rather than about the merits of the decision. Examples of maladministration would be unreasonable delay, neglect, giving wrong information and discrimination.

The Ombudsman's decision is final and binding for all parties, subject to any appeal made to the High Court on a point of law. It can be contacted at:

Members can also submit a complaint form online:

www.pensions-ombudsman.org.uk/making-complaint

Determining appeals is anything but straightforward, therefore Southwark Pension Services is available to help employers with this task and will provide information on the process and Regulations that may be involved. However, Southwark Pension Services cannot draft responses, advise upon decisions, or become otherwise directly involved with an employer/adjudicator function. It is important that employers keep comprehensive records in the event of an appeal from members.

Members must not be discouraged from submitting an appeal.

If a dispute over ill-health has emerged, it would be sensible for an employer to first check that all the regulatory requirements have been complied with. If they have not, a fresh decision needs to be made. Consider the following questions:

• Has a qualified, approved medical practitioner been used to assess the member’s eligibility?
• Has the medical practitioner clearly stated that the member is not assessed as permanently incapable?
• Has the medical practitioner paid due consideration to the duties of the post?
• Has the medical practitioner considered reports from the member’s GP, consultants etc. in arriving at that decision?
• Has the medical practitioner made a recommendation in accordance with the LGPS Regulations?
• Has the employer made their decision having considered all relevant evidence?
• Has the employer asked all of the necessary questions to have satisfied themselves before reaching any decision?

It is not the role of the adjudicator to question the opinion of a suitably qualified, approved medical practitioner, but the assessment must be in accordance with the eligibility criteria in the Regulations.

Due to the scope of the Pensions Act 1995, the adjudicator may be asked to consider a disagreement about the way in which a Scheme employer has exercised a discretionary power under both the main scheme Regulations and the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006. In such cases, the role of the person deciding the disagreement is not to overturn the initial decision but to ensure that the discretion has been exercised reasonably, and in cases where this is found not to be the case, to determine that the matter should be reconsidered in a proper manner.