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Internal dispute resolution procedure

Over the course of a local government pension scheme (LGPS) member's employment and even after they have left, certain decisions are made that can affect the member's benefits. The law provides the member with the opportunity to challenge decisions that they disagree with. Within the LGPS we have a formal internal dispute resolution procedure (IDRP) to enable this to happen.

The purpose of this guide is to help employers understand their responsibilities as an employer within the formal dispute process under the LGPS.

Decision making process of scheme employers or an administering authority Back to top

Throughout an individual's membership of the scheme the rules of the LGPS require decisions to be taken by both the employer and the administering authority which will affect the benefits of a member or their dependants may be entitled to receive. We call these 'first instance decisions'.

It is very important that you as a scheme employer understand the decisions that you and the administering authority are responsible for.

The key decisions are summarised below.

Employer decisions

whether an employee is eligible to join the scheme
what elements of pensions pay are to be treated as pensionable
calculating final pay (including CARE pay and assumed pensionable pay) to be used in calculating pension benefits
deciding an employee contribution rate
deciding an employee's entitlement to benefit on leaving the scheme for whatever reason
exercising a number of employer specific discretions (e.g. entitlement to early release of pension benefits, waiving actuarial reductions)
any other employer decision that affects an employee pension rights

Obligation to inform the member Back to top

Whenever you inform the member of a decision (by email or letter) you must include a specific reference to the individual's right to have that decision referred to the stage 1 IDRP adjudicator.

All the information below must be provided as part of this:

stage 1 IDRP adjudicator’s job title
the address at which he or she can be contacted
the time limits within which the rights under the regulations may be exercised

You must also provide a clear reference to the fact that the individual is able to seek the support of the Pensions Advisory Service (TPAS) in helping to resolve any dispute.

Specimen IDRP first instance decision letter

You can use this wording in any decision letter issued to a scheme member, highlighting their right of appeal under the LGPS formal IDRP.

Specimen IDRP first instance decision letter

Informal settlement of disputes Back to top

Avoiding appeals

Where a member is clearly unhappy with a decision and may resort to the formal IDRP in the absence of any further action by the body that took the decision, it makes sense for an appropriate person from the employer to offer the member further information of the reasons for the decision, perhaps at an informal meeting.

In some instances, where the issues are not complex, this recognition of their concerns, and the opportunity to understand more about the decision, may be enough to satisfy the complainant.

Unresolved informal disputes

Sometimes, informal attempts to resolve disagreements fail. The member has a statutory right to then have the formal IDRP applied, which is covered in the next sections. Once this course of action is embarked on, detailed investigations will take place into not only the decision made but the process involved in reaching those decisions.

Please note: it is vitally important, however, that individuals are not discouraged from submitting an appeal via an IDRP where an informal discussion has not resulted in a satisfactory resolution. Such practices could result in fines or other sanctions handed to you from the Pensions Regulator.

General right of appeal Back to top

The right to invoke the formal process is open not only to members themselves.

Who may appeal?

a member or a prospective member
a widow or widower of the member
a surviving civil partner of the deceased
a cohabiting partner
the deceased member's dependants
the member's representative

When and why can the applicant appeal?

A member (or alternative applicant) may appeal against any decision made by the employer or the administering authority that affects that member's rights or benefits under the scheme, or against any other act or admission by the bodies.

The member must appeal within six months of the date they are notified of that decision, or from the date of the act or omission. The adjudicator has discretion to extend this time limit.

The member has a further right of appeal to the administering authority if dissatisfied with the adjudicator’s decision.

Exceptions to the procedure

The procedure does not apply if, in respect of the complaint or dispute:

proceedings have begun in any court or tribunal
the Pensions Ombudsman has commenced an investigation

The formal internal appeal process

This is in two stages:

stage 1 is looked at by a person who is the first instance decision maker who has been appointed to look at these cases
stage 2 is looked at by Staffordshire Penson Fund. The appointed person for the Fund is the Head of Treasury and Pensions

Stage 1 - appeal to person that made the original decision Back to top

Employer responsibility - appointing a stage 1 adjudicator

Under stage 1 of the IDRP, scheme employers are required to appoint an adjudicator to consider each dispute received.

There is no specific requirement set out in any legislation regarding the qualification of the stage 1 adjudicator only that one has to be appointed. In reality, and for best practice, it would be expected that the person chosen should:

be independent of the original decision-making process
be able to confirm they have no conflict of interest in considering any pension dispute
have sufficient experience to understand the details of the dispute before them, enabling them to make a determination
have the capacity to perform the role

The administering authority cannot specify who your stage 1 adjudicator should be, although it is important that you do confirm the name, job title and contact details of your stage 1 adjudicator to the Staffordshire Pension Fund.

When making your appointment you might consider a suitable person to be your solicitor, human resources manager or payroll manager. The person does not have to be an employee or elected member of the authority.

Please note: it is important, once your stage 1 adjudicator is in place, to ensure you include their job title and contact details in any decision notifications you issue. It is also essential that person is free to act independently of the matter under consideration and can satisfy all parties they have no conflict of interest in considering the dispute.

Timescale for making an appeal application

The applicant must submit their application within six months of the date they are notified of the decision which they wish to appeal. Your stage 1 adjudicator has the discretion to extend this time limit if they believe there is reason to do so.

How should they apply?

Applications under stage 1 should be made to the adjudicator in writing signed on or on behalf of the applicant. Each applicant must include:

the applicant's full name, national insurance number, address and date of birth
if the applicant is not a member, their relationship to the member, the member's full name, address, date of birth, national insurance number and the name of the member’s scheme employer
a statement giving details of the nature of the disagreement and the reasons why the applicant is aggrieved
a copy of the decision in dispute

Please note: on receipt the adjudicator should acknowledge the application and at the same time advise the applicant that the Pensions Advisory Service is available to help them if required.

You can use this specimen acknowledgement letter.

Considering stage 1 appeals Back to top

The purpose of the first stage of the IDRP is to carry out a formal review of the decision of the organisation that is being disputed. It is an opportunity to reconsider the facts of the case, in particular:

to ensure the LGPS regulations as well as any overriding legislation have been correctly applied
the correct procedures followed and, importantly, evidenced
consider all facts, reports, background information before reaching a decision
request further evidence if necessary
determine whether any relevant facts or evidence were omitted or overlooked
the adjudicator must provide a determination within two months of receipt of the appeal
if not, the adjudicator must write to the applicant immediately explaining the reason for delay and confirm when the determination will be made

It is not possible for the stage 1 adjudicator to alter the original decision. Where applicable the adjudicator would be expected to refer the matter back to the organisation that took the original decision, where it is considered that the original decision is flawed, setting out the actions the adjudicator would expect to see undertaken.

Notice of stage 1 decision Back to top

Within two months of receiving the appeal (or such longer period as the stage 1 adjudicator has provided written confirmation of an extension to the time limits) the stage 1 adjudicator must provide a written notice of their decision. This notice must be sent to:

the applicant (and/or his or her personal representative)
the scheme employer
Staffordshire Pension Fund

The decision notice must include the following:

the question of determination
evidence received and considered
the decision (see the notes below)
a reference to any legislation or scheme provision that it relies upon
where relevant, a reference to the scheme provisions conferring the discretion that has caused the disagreement
a reference to the applicants right to have their disagreement reconsidered by the administering authority providing the necessary contact details
the time limits for making a stage 2 appeal
a statement that the pensions ombudsman (TPO) is available to assist the member with any difficulty with the scheme which remains unresolved, and the address for TPO

Important points to note about the decision

Please note the following:

the adjudicator cannot make a determination outside the provision of the regulations
the adjudicator cannot make an award of compensation
a successful appeal only applies to that particular case
unless the applicant refers the decision to the adjudicator of the Staffordshire Pension Fund for determination, then the decision raised by the adjudicator is final and binding on the scheme employer
it is important that employers keep comprehensive records in the event of an appeal from members

You can use this specimen stage 1 determination letter wording.

Consideration of medical appeals Back to top

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.

Checklist

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 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.

Employer discretions Back to top

Due to the scope of the Pensions Act 1995, the adjudicator at both stages 1 and 2 may be asked to consider a disagreement about the way in which a scheme employer has exercised a discretionary power under both the LGPS regulations and where they apply, the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006.

This will also cover those areas of discretion that Staffordshire County Council, as the administering authority, are required to make any decision on.

Please note: 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 be reconsidered in a proper manner.

You can use this specimen stage 1 determination letter.

Stage 2 - referral to the administering authority where not satisfied with the original determination Back to top

This is carried out where:

the applicant is dissatisfied with the stage 1 adjudicator's decision

or
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

Timescale for making an application

The applicant must submit their application within six months of the date they are notified of the decision which they wish to appeal, or from the date of the act or omission. As with stage 1, the stage 2 adjudicator also has the discretion to extend this time limit if they believe there is reason to do so.

Purpose of stage 2 adjudication

This is to enable the applicant to refer their complaint to the administering authority for an independent review, where they are dissatisfied with the decision of the stage 1 adjudicator.

An applicant can also refer their case to the stage 2 adjudicator where:

the stage 1 adjudicator has failed to issue either a determination, or a letter extending the time limits, within two months from the date on which the application was made

or
an interim letter extending the time limits was issued, but the stage 1 adjudicator then has failed to issue a determination

Please note: the stage 2 adjudicator cannot replace a first instance decision of an employer. Consequently, they can only instruct that the employer reconsider its decision where either robust processes have not been followed or a discretion has been exercised. The decision of the stage 2 adjudicator is binding and can only be overturned by the Pensions Ombudsman or the High Court.

Stage 2 steps to follow

In reality the steps taken by the stage 2 adjudicator are the same as that at stage 1 of the IDRP.

Under stage 2 the adjudicator will reconsider the original determination, taking full account of the facts of the case and of any evidence submitted or relied on by either party at stage 1. They will also:

check that the LGPS regulations were correctly applied
ensure that sound, impartial procedures were used to reach the stage 1 determination
ensure the original determination was consistent with other decisions reached and that it would stand up to external scrutiny
review 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 the administering authority

Notice of a stage 2 decision

Within two months of receiving the appeal (or such longer period as the stage 2 adjudicator has provided written confirmation of an extension to the time limits) the stage 2 adjudicator must provide a written notice of their decision. The decision must be sent to:

the applicant (and/or his or her personal representative)
the scheme employer

The determination notice must include the following:

the question of determination
evidence received and considered
the decision
a reference to any legislation or scheme provision that it relies upon
where relevant, a reference to the scheme provisions conferring the discretion that has caused the disagreement
a statement that The Pensions Ombudsman (TPO) is available to assist the member with any difficulty with the scheme which remains unresolved, and the address for TPO

You can use the wording on this specimen stage 2 determination letter.

Beyond IDRP - the external appeal Back to top

Where a member remains dissatisfied after the IDRP has been exhausted, they can seek independent review of their appeal. The Pensions Ombudsman can review appeal decisions beyond the IDRP.

The Pension Ombudsman Back to top

Their role is:

they will consider cases after the member's case has been through the scheme's two Stage IDRP
they may investigate and determine any compliant or dispute of fact or law, in relation to the scheme, made or referred in accordance with the Pension Scheme Act 1993
they can make awards of compensation for loss and for distress and inconvenience

The determination of the Ombudsman is final and binding on all parties, subject only to an appeal on a point of law to the Chancery Division of the High Court.

Further points on appeals Back to top

As you can imagine, determining appeals is anything but straightforward. Therefore, Staffordshire Pension Fund is available to help employers with this task and will provide information on the process and regulations that may be involved.

However, we cannot draft responses, advise upon decisions or become otherwise directly involved with an employer or adjudicator function.

Please note: it is important that employers keep comprehensive records in the event of an appeal from members.

Contact details Back to top

The Pensions Advisory Service (TPAS)

The Pensions Advisory Service (TPAS) is an independent, no profit, organisation that provides free information advice and guidance on all types of pension scheme. Their role is primarily one of negotiation and advice and they are available to assist individuals and their dependants in connection with any pension difficulties they have failed to resolve.

Please note: TPAS has no statutory power to impose any course of action or determination on an employer or the administration authority. They can give an opinion to any individual as to whether they believe any complaint would be a case that the Pension Ombudsman might pursue.

Website: Pensions Advisory Service

Online enquiry form

Postal address: Money and Pensions Service, 120 Holborn, London, EC1N 2ND

Phone: 0800 011 3797

The Pensions Ombudsman (PO)

The Pensions Ombudsman is able to investigate and determine any allegation of maladministration or any dispute of fact of law in relation to the Local Government Pension Scheme made or referred in accordance with the Pension Scheme Act 1993. The Pensions Ombudsman will, however, only usually investigate cases which has been through stages 1 and 2 of the internal dispute resolution procedure.

Please note: a Pensions Ombudsman decision is binding on all parties and can only be challenged on a point of law in the Supreme Court

Website: Pensions Ombudsman

Email: Enquiries to the Pensions Ombudsman

Postal address: 10 South Collonade, Canary Wharf, E14 4PU

Phone: 0800 917 4487 (for the early resolution service, select option 1)