North Lanarkshire Update
I explained yesterday that Action 4 Equality Scotland has been fighting a lone battle on the pensions front without any support from the trade unions.
But it's actually worse than that because here's the advice one NLC employee received via their trade union:
"Our past experience suggests that these types of payment, related to alleged pension loss, are not included in any settlement reached with local authorities. This is because there is an argument about whether these payments could even be claimed in practice if the claims were to go to a Tribunal hearing."
Beggars belief if you ask me, but presumably the unions will now change their tune in light of the recent landmark decision against Labour-run North Lanarkshire Council.
**Stop Press** (23/05/16)
Here's a great way to start the week - news of another big victory in the fight for equal pay in Labour-run North Lanarkshire Council!
The Scottish Public Pensions Agency (SSPA) has upheld the appeal brought by A4ES and overturned the decision of North Lanarkshire Council that equal pay settlements are not pensionable.
Now that's a very big deal for the individuals affected by the decision and here is a copy of a letter from the SSPA to Sarah Gilzean of HBJ Gateley, the solicitors who have been acting very ably for A4ES clients in this long-running dispute.
If I were running North Lanarkshire Council, I'd be asking some searching questions about the 'quality' of advice the Council has been receiving lately because, yet again, the Labour-run administration has been left with egg all over its face.
I think it's also worth mentioning that A4ES has been fighting this particular battle all on its own without any support from the trade unions whose attitude has been little, if any, different from the employers.
I'll have more to say on this subject in the days ahead, so watch this space.
SCOTTISH PUBLIC PENSIONS AGENCY
Ms Sarah Gilzean Associate
HBJ Gately
Exchange Tower
19 Canning Street Edinburgh
EH3 8EH
Your ref: SG/ACT0010.00006/CM Our ref: LGT/05/400/10
20 May 2016
Dear Ms Gilzean
THE LOCAL GOVERNMENT PENSION SCHEME (SCOTLAND) REGULATIONS 2014
INTERNAL DISPUTES RESOLUTION PROCEDURE STAGE 2— NON-MEDICAL APPEAL
1. I refer to your letter of 14 March 2016 in which you applied to the Scottish Ministers under stage 2 of the Local Government pension Scheme's Internal Disputes Resolution Procedure (IDRP2) against North Lanarkshire Council's decision not to treat `settlement payments', paid to appellants in respect of the `second wave' of their successful equal pay claims, as pensionable.
2. At stage 1 of the IDRP process June Murray, Head of Executive Services (on behalf of North Lanarkshire Council), was appointed to review the Council's decision and she provided her determination on the 2 February 2016. Ms Murray dismissed your appeal on the grounds that the regulations had been applied correctly, as set out in Regulation 73 of The Local Government Pension Scheme (LGPS) (Scotland) regulations 2014.
3. It may be helpful to note that the LGPS (Scotland) is governed by regulations made by the Scottish Ministers, whilst the responsibility for administering the scheme rests with Local Authorities, who must comply with the regulations and cannot act outside their terms. The question for determination by the SPPA, on behalf of the Scottish Ministers, is whether North Lanarkshire Council have acted in a way other than that as set out in, and required under, the relevant Local Government Pension Scheme (Scotland) Regulations.
4. In considering an application, the role of the Scottish Ministers is not simply to consider the case presented to the Appointed Person, and their determination, but to decide which facts are relevant to their consideration of the case. I have reviewed the information provided to me, in order to inform my decision, on behalf of Scottish Ministers.
5. In 2014 an amendment was made to the LGPS (Scotland) regulations to clarify the policy intent that a back-payment of arrears of pay, made in respect of an equal pay claim, should be treated as pensionable. It is only an amount paid to members in respect of `compensation for hardship' caused by the lower pay that should be non-pensionable.
6.- The reasoning behind this policy was that, if it was decided by an employer that a payment in respect of an equal pay claim ruling in favour of the member should not be pensionable, there would remain pension cost implications in the longer term. If the employee's rate of pay is increased as a result of the equal pay claim, his or her pensionable pay will also increase. When the employee leaves, his / her final salary benefits are calculated on their current pensionable pay and the whole period of membership in the Scheme.
7. Therefore the resulting pensionable pay upon which the benefits are payable increases, as a result of the equal pay claim, but no employer or employee contributions will have been paid to the Pension Fund on these payments. This shortfall in contributions to the Fund would be met by scheme employers via an increase in the employer's contribution rate in successive Fund valuations.
8. At paragraph (7) of her determination, Ms Murray accepts that the Employment Tribunal Award constitutes a retrospective payment that comes within the definition of pensionable pay that requires North Lanarkshire Council to make these payments to Strathclyde pension fund. Ms Murray contends that this is because the Council paid this compensation after the deduction of income tax and national insurance contributions which was then paid to Her Majesty's Revenue & Customs (HMRC).
9. Ms Murray then states that the `second wave' of `settlement payments' do not fall under this definition, because the Council considers that a "settlement which compensates for arrears of pay" is not pensionable. This, she says, is backed up by North Lanarkshire's decision not to pay income tax or national insurance contributions on it.
10. Ms Murray's response at paragraph (14) states that; "The Council has not informed Strathclyde pension fund (SPF) that the compensation payment is not pensionable. The Council cannot, however, confirm that the compensation payment is pensionable as it is not an award of compensation and has had no income tax liability determined on it" (my underlining). Scottish Ministers find this statement to be confused and an obstruction to finding an equitable solution to the disagreement.
11. In my judgement Ms Murray has misconstrued the LGPS (Scotland) regulations. Regulation (20) the 'Meaning of pensionable pay' states:
"20.—(1) Subject to regulation 21 (assumed pensionable pay), an employee's pensionable pay is the total of—
(a) all the salary, wages, fees and other payments paid to the employee; and
(b) any benefit specified in the employee's contract of employment as being a pensionable emolument.
(2) But an employee's pensionable pay does not include –
(h) any award of compensation (excluding any sum representing arrears of pay] for the
purpose of achieving equal pay in relation to other employees" (my underlining).
This in effect means that any sum representing arrears of pay, for the purposes of achieving equal pay, must be treated as pensionable.
12. In the view of Scottish Ministers, the regulations require that remuneration paid to persons for loss of past earnings should put those persons the position they would have been, had they been paid the correct amount in the first instance; and therefore should be recognised for pension purposes.
13. The Scottish Ministers uphold this appeal. In this case Lanarkshire Council is required to pay the income tax and national insurance liabilities on these settlement' amounts and also the requisite employer contributions on behalf of the members. Members will be required to pay their own contributions based on the settlement amounts.
14. As you will be aware, the Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the Local Government Pension Scheme made or referred in accordance with the Pension Schemes Act 1993. In cases of alleged maladministration, the Pensions Ombudsman has the powers to award compensation to the appellant.
15. Before reviewing a case, the Ombudsman would normally expect TPAS to have considered it before an approach is made to him. The Pensions Advisory Service (TPAS) is available to assist members of occupational pension schemes in connection with any difficulty with the scheme that is unresolved following the scheme's Internal Disputes Resolution Procedure (IDRP). The address of TPAS is 11 Belgrave Road, London, SW1V 1 RB. The Pensions Ombudsman's address is the same as that of TPAS.
16. You also have the right to ask the Scottish Public Services Ombudsman at Freepost SPSO, to consider complaints which relate to the administrative actions of SPPA and not matters which relate to decisions relating to the pension regulations.
17. A copy of this letter will be provided to June Murray, the Appointed Person, and Linda Welsh, Strathclyde Pension Fund, for their respective action.
Yours sincerely
Kimberly Linge
Policy Manager, LGPS
HBJ Gateley are the lawyers representing A4ES clients in the ongoing dispute with North Lanarkshire Council over pensions and equal pay - and they've done a great job if you ask me, in setting out the employees' case in a formal appeal to Scottish Ministers which is now underway.
Here's an extract of the appeal letter which explains the scale of the financial loss being suffered by former NLC employees (mainly women) who are not being allowed by the Council to retire on the same basis as their male colleagues doing traditional jobs, such as refuse workers and gardeners.
EH3 8EH
Your ref: SG/ACT0010.00006/CM Our ref: LGT/05/400/10
20 May 2016
Dear Ms Gilzean
THE LOCAL GOVERNMENT PENSION SCHEME (SCOTLAND) REGULATIONS 2014
INTERNAL DISPUTES RESOLUTION PROCEDURE STAGE 2— NON-MEDICAL APPEAL
1. I refer to your letter of 14 March 2016 in which you applied to the Scottish Ministers under stage 2 of the Local Government pension Scheme's Internal Disputes Resolution Procedure (IDRP2) against North Lanarkshire Council's decision not to treat `settlement payments', paid to appellants in respect of the `second wave' of their successful equal pay claims, as pensionable.
2. At stage 1 of the IDRP process June Murray, Head of Executive Services (on behalf of North Lanarkshire Council), was appointed to review the Council's decision and she provided her determination on the 2 February 2016. Ms Murray dismissed your appeal on the grounds that the regulations had been applied correctly, as set out in Regulation 73 of The Local Government Pension Scheme (LGPS) (Scotland) regulations 2014.
3. It may be helpful to note that the LGPS (Scotland) is governed by regulations made by the Scottish Ministers, whilst the responsibility for administering the scheme rests with Local Authorities, who must comply with the regulations and cannot act outside their terms. The question for determination by the SPPA, on behalf of the Scottish Ministers, is whether North Lanarkshire Council have acted in a way other than that as set out in, and required under, the relevant Local Government Pension Scheme (Scotland) Regulations.
4. In considering an application, the role of the Scottish Ministers is not simply to consider the case presented to the Appointed Person, and their determination, but to decide which facts are relevant to their consideration of the case. I have reviewed the information provided to me, in order to inform my decision, on behalf of Scottish Ministers.
5. In 2014 an amendment was made to the LGPS (Scotland) regulations to clarify the policy intent that a back-payment of arrears of pay, made in respect of an equal pay claim, should be treated as pensionable. It is only an amount paid to members in respect of `compensation for hardship' caused by the lower pay that should be non-pensionable.
6.- The reasoning behind this policy was that, if it was decided by an employer that a payment in respect of an equal pay claim ruling in favour of the member should not be pensionable, there would remain pension cost implications in the longer term. If the employee's rate of pay is increased as a result of the equal pay claim, his or her pensionable pay will also increase. When the employee leaves, his / her final salary benefits are calculated on their current pensionable pay and the whole period of membership in the Scheme.
7. Therefore the resulting pensionable pay upon which the benefits are payable increases, as a result of the equal pay claim, but no employer or employee contributions will have been paid to the Pension Fund on these payments. This shortfall in contributions to the Fund would be met by scheme employers via an increase in the employer's contribution rate in successive Fund valuations.
8. At paragraph (7) of her determination, Ms Murray accepts that the Employment Tribunal Award constitutes a retrospective payment that comes within the definition of pensionable pay that requires North Lanarkshire Council to make these payments to Strathclyde pension fund. Ms Murray contends that this is because the Council paid this compensation after the deduction of income tax and national insurance contributions which was then paid to Her Majesty's Revenue & Customs (HMRC).
9. Ms Murray then states that the `second wave' of `settlement payments' do not fall under this definition, because the Council considers that a "settlement which compensates for arrears of pay" is not pensionable. This, she says, is backed up by North Lanarkshire's decision not to pay income tax or national insurance contributions on it.
10. Ms Murray's response at paragraph (14) states that; "The Council has not informed Strathclyde pension fund (SPF) that the compensation payment is not pensionable. The Council cannot, however, confirm that the compensation payment is pensionable as it is not an award of compensation and has had no income tax liability determined on it" (my underlining). Scottish Ministers find this statement to be confused and an obstruction to finding an equitable solution to the disagreement.
11. In my judgement Ms Murray has misconstrued the LGPS (Scotland) regulations. Regulation (20) the 'Meaning of pensionable pay' states:
"20.—(1) Subject to regulation 21 (assumed pensionable pay), an employee's pensionable pay is the total of—
(a) all the salary, wages, fees and other payments paid to the employee; and
(b) any benefit specified in the employee's contract of employment as being a pensionable emolument.
(2) But an employee's pensionable pay does not include –
(h) any award of compensation (excluding any sum representing arrears of pay] for the
purpose of achieving equal pay in relation to other employees" (my underlining).
This in effect means that any sum representing arrears of pay, for the purposes of achieving equal pay, must be treated as pensionable.
12. In the view of Scottish Ministers, the regulations require that remuneration paid to persons for loss of past earnings should put those persons the position they would have been, had they been paid the correct amount in the first instance; and therefore should be recognised for pension purposes.
13. The Scottish Ministers uphold this appeal. In this case Lanarkshire Council is required to pay the income tax and national insurance liabilities on these settlement' amounts and also the requisite employer contributions on behalf of the members. Members will be required to pay their own contributions based on the settlement amounts.
14. As you will be aware, the Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the Local Government Pension Scheme made or referred in accordance with the Pension Schemes Act 1993. In cases of alleged maladministration, the Pensions Ombudsman has the powers to award compensation to the appellant.
15. Before reviewing a case, the Ombudsman would normally expect TPAS to have considered it before an approach is made to him. The Pensions Advisory Service (TPAS) is available to assist members of occupational pension schemes in connection with any difficulty with the scheme that is unresolved following the scheme's Internal Disputes Resolution Procedure (IDRP). The address of TPAS is 11 Belgrave Road, London, SW1V 1 RB. The Pensions Ombudsman's address is the same as that of TPAS.
16. You also have the right to ask the Scottish Public Services Ombudsman at Freepost SPSO, to consider complaints which relate to the administrative actions of SPPA and not matters which relate to decisions relating to the pension regulations.
17. A copy of this letter will be provided to June Murray, the Appointed Person, and Linda Welsh, Strathclyde Pension Fund, for their respective action.
Yours sincerely
Kimberly Linge
Policy Manager, LGPS
Pensions and Equal Pay (20/04/16)
Here's an extract of the appeal letter which explains the scale of the financial loss being suffered by former NLC employees (mainly women) who are not being allowed by the Council to retire on the same basis as their male colleagues doing traditional jobs, such as refuse workers and gardeners.
"21 The following example illustrates the scale of the loss to the Appellants:
"Mrs A has been in service for 20 years and has made a contribution to her pension for the full period of her employment. Prior to the settlement offer Mrs A received £3,838 pension per year with a non-taxable lump sum payment of £11,512. After taking into account the additional earnings that Mrs A received in the settlement and contributing £960 in additional contributions, Mrs A would receive an increased pension of £5,375.00 per year with a non-taxable lump sum payment of £16,125. Mrs A would therefore have a gain of £1,537 extra in her pension per year and an additional £4,613 as a lump sum. Over her lifetime Mrs A would stand to gain an additional £43,800 from her increased pension entitlement."
I can't even begin to understand how Labour-run North Lanarkshire can claim to be an equal opportunities employer when the Council is arguing that a retiring woman worker can be treated so much less favourably than a comparable male employee.
In fact, it's a complete disgrace if you ask me and I only hope that Scottish Ministers have the sense to uphold the appeal from A4ES clients.
I'll be writing shortly to all MSPs and MPs in North Lanarkshire with a copy of the appeal letter and will be urging them to support their local constituents by making representations to the Scottish Government.
"Mrs A has been in service for 20 years and has made a contribution to her pension for the full period of her employment. Prior to the settlement offer Mrs A received £3,838 pension per year with a non-taxable lump sum payment of £11,512. After taking into account the additional earnings that Mrs A received in the settlement and contributing £960 in additional contributions, Mrs A would receive an increased pension of £5,375.00 per year with a non-taxable lump sum payment of £16,125. Mrs A would therefore have a gain of £1,537 extra in her pension per year and an additional £4,613 as a lump sum. Over her lifetime Mrs A would stand to gain an additional £43,800 from her increased pension entitlement."
I can't even begin to understand how Labour-run North Lanarkshire can claim to be an equal opportunities employer when the Council is arguing that a retiring woman worker can be treated so much less favourably than a comparable male employee.
In fact, it's a complete disgrace if you ask me and I only hope that Scottish Ministers have the sense to uphold the appeal from A4ES clients.
I'll be writing shortly to all MSPs and MPs in North Lanarkshire with a copy of the appeal letter and will be urging them to support their local constituents by making representations to the Scottish Government.
