- This report concerns
nineteen married women employed by the County Council who elected to
pay additional contributions between the period April 1993 to 31 March
1998 in order to secure an improved widowers pension for their spouses.
- In 1998 the Committee
resolved to exercise discretionary powers available within the 1998
Regulations that enable all married women to obtain this benefit at
no additional cost to the scheme member. The 1998 Regulations make no
provision for the return of contributions to those members who had previously
elected to pay for this benefit nor do they offer any general powers
to refund contributions.
- It was only after
some prompting from one of the contributors that the Committee was asked
to consider this matter. The Committee considered a report on 22 February
2002, copy attached as Annex 1,
which set out four options for dealing with the situation. The Committee
agreed option (d), which was to take no further action.
- The Committee
requested the County Treasurer to contact the contributors to advise
them of the decision. Unfortunately, as a result of confusion about
who should send this communication, the Committee’s request was not
carried out. The contributor referred to in paragraph 3 above subsequently
queried the progress on this matter and was told of the Committee’s
decision. As a result, the contributor wrote to the Chairman of the
Pension Fund Committee (copied to Councillors Margaret Godden and Purse)
asking the Committee to reconsider their decision. A copy of this letter
has been circulated separately to members of the Committee. The letter
states that the Committee had not fully considered the various options
available.
- The Chairman agreed
to the contributor’s request that the Committee should reconsider their
decision of 22 February 2002.
- The Council’s
Pensions Manager met with Councillors Godden and Purse at their request
to discuss the letter. The Councillors were concerned that there had
been no consultation with the contributors before the previous report.
The officers had not considered consulting with contributors because
the options were limited and the contributors had no choice in the matter.
The Councillors were also interested in what other councils had done.
A check was made with the City Council, where there is a single case.
The City have taken no action as yet, but will be interested in the
outcome of this report. Checks with neighbouring counties have revealed
that they have also not taken any action. This would suggest that authorities
are only considering this matter if faced with an enquiry from a contributor
affected by the change of regulation.
The Options
Available
- There is little
to add to the original report at Annex
1 but the following observations and information may assist
the Committee’s deliberations:
Option
(a)
This
option is only exercisable for employees that leave the Council’s employment
with an immediate payment of pension. It is not available to the ten
contributors that had already left when the first report was produced,
nor to the three who have left since, nor to any of the remaining six
employees who may leave without an immediate pension entitlement. Augmentation
may also not be possible in circumstances where the employee is already
entitled to a full pension.
The
Pensions Benefits Sub-Committee would need to exercise its discretion
to augment the employee’s service at the time of retirement so these
decisions would be taken sporadically and potentially over a period
of 23 years (i.e. up to 2026, the point at which the youngest of the
six remaining employees reaches the age of 60).
The
six remaining employees have paid contributions varying in total from
£16.69 to £2150.35. The total received from the contributor referred
to above is £219.55p. Tax relief would have been given on the contributions
where appropriate.
The
augmentation would be based on the contributions received adjusted for
pension fund investment returns. The adjusted contributions would provide
an additional annual pension using prevailing annuity rates. For example,
contributions of £1,000 would currently equate to an additional annual
pension of approx £60 per annum.
Option
(b)
This
provides for discretionary augmentation of a widowers pension. Compensation
would be at a similar level as option (a). This option would be subject
to the same application and restrictions as outlined above.
Option
(c)
This
is not an option for the reason given in the report at Annex
1.
Option
(d)
The
rationale for this option is that the nineteen contributors had a potential
benefit available to them, for the duration of the period they contributed.
The benefit was not available to other female contributors and the contributors
had the peace of mind that their husbands would receive a full widowers
pension in the event of their death. They have therefore received a
benefit for the contributions made and in this respect it is no different
from contributions paid for term life insurance that may or may not
produce a benefit.
Conclusion
- The contributions
ceased in 1998 when the Council exercised its discretion to enable women
to use pre-1988 service for widowers’ benefits at no additional cost.
The nineteen contributors have not been disadvantaged from this point
onwards.
- During the period
that contributions were paid the contributors were entitled to a benefit
not otherwise available.
- None of the options
provide a satisfactory or equitable solution. Option (d) is the only
option that provides equal treatment for all of the original nineteen
contributors.
RECOMMENDATION
- The Committee
is requested to reconsider the decision taken at the 22 February 2002
meeting.