UK Social Security and Child Support Commissioners' Decisions

 


[2007] UKSSCSC CP_60_2006 (09 February 2007)

PLH Commissioner's Files: CP 60/06 & 61/06

SOCIAL SECURITY ACTS 1992-1998

APPEAL FROM DECISION OF APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for: Retirement Pension

Appeal Tribunal: Bournemouth

Tribunal Case Ref: U/03/185/2003/01306 & 2005/00592

Tribunal date: 11 November 2005

Reasons issued: 17 November 2005

1. This claimant's appeals against the two combined decisions of the Bournemouth appeal tribunal sitting on 11 November 2005 (Mr D J Teagle, chairman, sitting alone) are dismissed, as in my judgment the tribunal's decisions were correct in every material respect as a matter of law. All the material points were properly dealt with, and the chairman's reasons were very clearly and carefully explained in the combined decision notice and statement of reasons he issued to the parties on 17 November 2005.
2. I decline the claimant's requests for an oral hearing of his combined appeal to me against the tribunal decisions, as having considered all of the very large volume of material contained in the two appeal files I am satisfied that the proceedings can be properly determined without a hearing; and indeed that so far as disposing of any issue of law is concerned (the sole relevant consideration on any appeal to a Commissioner under section 14 Social Security Act 1998) such a hearing would serve no useful purpose. The claimant's contentions have been very fully advanced, indeed reiterated, in the detailed written material he has submitted over the period of what is now well over three years since his appeal proceedings before the tribunal started, and having considered it all I am satisfied there is no relevant issue of law that does not already appear sufficiently clearly, or on which yet further argument at an oral hearing could assist me in anything I have to decide.
3. The claimant is a man now aged 68, a retired accountant dissatisfied with the way his National Insurance retirement pension has been calculated. The material facts are that he was born on 31 August 1938 so that he reached the state pensionable age of 65 on Sunday 31 August 2003 and thereupon qualified, having duly claimed it, for his state retirement pension commencing on the following day, 1 September 2003. He met the contribution conditions for a full award of the basic element of category A retirement pension under section 44 Social Security Contributions and Benefits Act 1992, at that time £77.45 a week, and also had a graduated entitlement of a further £5.34 a week from employment before 6 April 1978. The only dispute is as to the further amount of his (earnings-related) category A additional pension entitlement from the national insurance fund for his 25 years of contribution as an employed earner from 6 April 1978. For this it is relevant that he had been in contracted-out employment, paying lower national insurance contributions, for a part of that time, from 6 April 1978 to 31 December 1991 inclusive; and on leaving that employment had a guaranteed minimum pension (GMP) entitlement secured for him in his employer's private occupational pension scheme in accordance with the contracting-out legislation. He elected to take his main benefits under that scheme in the form of an early retirement pension starting at once, but in fact continued in other employment which was contracted-in. This carried sufficient earnings for him to accrue continued earnings-related additional category A retirement pension rights under section 44. The weekly amount of his GMP from state pensionable age for which the occupational scheme had assumed responsibility under the contracting-out legislation was £48.21 at the date his service in that scheme ceased, increased to £106.83 by the time he reached that age and the guarantee crystallised.
4. The Secretary of State accordingly calculated the claimant's category A pension entitlement, in the disputed award decision of 11 August 2003 under appeal, as follows. First the claimant was awarded the full basic pension of £77.45 per week, plus £5.34 graduated retirement benefit for periods of employment before the present earnings-related scheme began in 1978. There is no dispute about either of those amounts. Then the amount of his additional category A pension entitlement was initially calculated "gross" (i.e. without taking account of the effect of the contracting-out) as a further £122.06 per week, broken up for convenience into £98.68 attributable to the period of his working life from 6 April 1978 to 5 April 1997 inclusive (the period while the legislation had provided for GMPs for contracted out employment), £20.78 for years from 6 April 1997 to 5 April 2002, and £2.60 for the period after 2002 (those periods reflecting successive changes in the accrual rate and way the additional pension was calculated).
5. Then to give effect to the legislation and the arrangements under which his former employment had been allowed to be contracted-out, the GMP already secured by the claimant's occupational scheme had to be offset under section 46(1) Pension Schemes Act 1993, against the pre-6 April 1997 element of that gross amount: in other words the £98.68 he would have got at age 65 from the state scheme for this period had he never been contracted out at all. The GMP in fact secured for him from that age had turned out to be greater, so initially he had nothing further to come from the state scheme for that period (though he did, and does, have the possibility of something in the future, since the weekly £98.68 is eligible for annual cost-of-living increases while the GMP secured in the private scheme, and hence the offset, stays fixed after age 65 at £106.83.) Applying the combined effect of section 44 Social Security Contributions and Benefits Act 1992 and section 46 Pension Schemes Act 1993 therefore, the starting rate of the claimant's category A retirement pension from 1 September 2003 was thus £106.17 per week (£77.45 plus £5.34 plus £122.06 less £98.68 fully offset by the GMP) and this was the amount he was awarded.
6. The claimant disputed the effect of the offset and appealed to the tribunal. After several adjournments and the obtaining of a formal determination of his GMP amount from H M Revenue and Customs, which the claimant also appealed, the tribunal heard the entire case together on 11 November 2005. In his reserved decision with full reasons issued on 17 November 2005 the chairman confirmed both the GMP calculation as so determined and the original category A retirement pension award, with £98.68 of the gross additional entitlement fully offset by the higher amount of GMP already secured. The claimant appeals to me against both aspects of that decision saying that his rights were violated and issues he raised were not dealt with. The tribunal chairman has granted the claimant leave to appeal, though without identifying what issues of law he considers might justify a challenge to his own very clear, well set out and fully reasoned decision.
7. The essence of the claimant's complaint remains what it always has been, though obscured by the subsidiary arguments and contentions that have multiplied as the proceedings have gone on. He considers it unfair that the offset of a GMP entitlement under section 46 Pension Schemes Act 1993 should operate in the way it does as outlined above, with a single subtraction of the total GMPs secured for a person at state pensionable age under any occupational scheme or schemes from the total additional category A pension he or she would then otherwise have stood to receive direct from the state scheme attributable to earnings factors for the aggregate period from 6 April 1978 to 5 April 1997 inclusive (when the original incarnation of the 1978 state earnings-related pension scheme with its contracting-out and GMP system was in force). He considers that period should instead be further subdivided, and any offset of his GMP entitlement under section 46 applied only to a separately calculated additional category A pension entitlement limited to the period down to the end of 1991 for which he was actually contracted-out: that would of course come to less than £98.68, reducing the offset.
8. That argument is plainly wrong and has been rejected already on several occasions in other appeals that have come before the Commissioners. I considered and rejected it myself, after an oral hearing, as long ago as December 2004 in a case relating to another claimant: see CP 2291/04. Rather than set out all the reasoning again here I will direct that a copy of that decision be annexed to this decision by way of explanation. Although the precise figures relating to that other claimant were of course different, exactly the same principles govern the way in which the legislation applies to this present claimant's case; and show why the central core of his argument on the present appeals is mistaken, as were the exactly similar arguments of the claimant in that other case. The way the offset provision has been applied to the present claimant in the Secretary of State's original decision, as confirmed by that of the tribunal, is in accordance with the mandatory requirements of the primary legislation: and for the same reasons as I referred to briefly in CP 2291/04 following CP 1023/04, there is nothing contrary to the Human Rights Act 1998 in this result. It cannot be said to deprive the claimant of anything to which he was otherwise entitled, nor does it discriminate against him.
9. I turn to the claimant's subsidiary arguments, which occupied much of the submissions before the tribunal and were further developed in the course of the present appeals before me. First the claimant says in his notice of appeal at page 349 of the main appeal file that the tribunal's decision was wrong because he received an immediate pension from his former employer on leaving at the end of 1991, and this had been secured to him at that point: the argument as amplified elsewhere is that the provisions for calculating a GMP at state pensionable age and offsetting it then against a category A additional pension entitlement are simply inapposite to such a situation, so should not have been applied as they were.
10. The remaining grounds set out in the claimant's notice of appeal are assertions in more or less general terms that his rights under the pensions legislation and the Human Rights Act have been violated; but from the various more detailed supplementary arguments he has also submitted his contentions have been conveniently distilled into the five specific issues defined in the Commissioner's direction of 16 March 2006 at pages 446 to 447, and can be summarised as follows.

(1) The initial calculation of his GMP entitlement on leaving service under his former employer's scheme on 31 December 1991 should have given him credit only for complete tax years, and should therefore not have included anything for his weeks of service from 6 April to 31 December 1991 inclusive.

(2) Since he received his main entitlement from his occupational scheme in the form of an immediate pension commencing when he left service, the GMP calculated and secured for him should not have included any increases in value between then and when he reached state pensionable age, since such revaluation is appropriate only to a period of deferment, and his was not a deferred pension.

(3) The tribunal was wrong to find that his GMP had been correctly increased in value over the period from the date of his leaving service until he attained state pensionable age at the fixed rate of 7.5% per annum compound: a lower rate ought to have been selected, which would have reduced the value of the GMP to be offset against his state additional entitlement.

(4) The amount of his category A additional pension had itself been incorrectly calculated, as a divisor of 25 years of his working life had been used and he considered it should have been 24.

(5) The tribunal was wrong in not finding that his human rights had been violated by the way in which his retirement pension entitlement had been calculated: either because this deprived him of a possession to which he was entitled for the purposes of Article 1 Protocol 1 ECHR, or because it embodied discrimination against him contrary to Article 14. In particular, the tribunal ought to have taken account of his contention that if after leaving contracted-out employment at the end of 1991 he had chosen to go and work in Spain (as he had actively considered doing at that time), instead of remaining in the United Kingdom and continuing to accrue earnings-related pension rights from employment that was contracted-in, he would have been better off as he would have received a pension from his employment in Spain to which the offset under section 46 of the 1993 Act would not have applied. This constituted discrimination against him and the tribunal ought to have so found.

11. The first point in the notice of appeal on the effect of the claimant opting to have his main occupational pension scheme benefits commence before retiring age is plainly mistaken. The purpose and effect of the guaranteed minimum pension provisions is to ensure that, within the overall benefits provided by a private occupational scheme which may well themselves be a lot more substantial, a minimum guaranteed level is secured to the person concerned from state pensionable age so as to take over from the national insurance fund responsibility for the corresponding amount otherwise accruing as his or her weekly entitlement to earnings-related additional pension under the state scheme itself. The requirement for this GMP amount to be calculated and secured from state pensionable age is not affected in any relevant way by the manner in which, or the date from which, the main benefits in the private occupational scheme start to be drawn.
12. The three further specific points (1) to (3) above, on the calculation of the GMP amount for which the claimant's occupational pension scheme was required to take responsibility and secure for him from state pensionable age, are succinctly and entirely accurately answered in the submission of Mr J Bailey of the solicitor's office, Revenue and Customs, dated 4 July 2006 at pages 456 to 461. For the reasons clearly and conclusively set out in that submission the GMP calculation embodied in the Revenue's decision of 9 February 2005 which was the subject of the second appeal was entirely correct and in accordance with the requirements of the legislation: in particular in taking into account earnings factors for the claimant's weeks of contracted-out employment in the part tax year to 31 December 1991; in continuing to revalue his GMP amount down to the end of the "final relevant year" before his state pensionable age in accordance with the Commissioner's decision in case CP 1764/05; and in applying the fixed revaluation rate of 7.5% compound because this was the rate applicable as the result of the claimant's occupational scheme having expressly opted for the fixed-rate method: see sections 14 and 16 Pension Schemes Act 1993. There was therefore no arguable ground on which the claimant's GMP amount of £106.83 at state pensionable age could validly have been disputed and the tribunal was right to reject his appeal on that aspect of the matter.
13. As to the fourth specific point, on the calculation of the claimant's additional pension entitlement under section 44 Social Security Contributions and Benefits Act 1992 for the period of his working life as an employed earner and contributor from 6 April 1978 to 5 April 1997 inclusive, there was also in my judgment never any arguable ground for the claimant to have disputed the Secretary of State's calculation embodied in the decision of 11 August 2003 which was the subject of the first appeal. As explained clearly and carefully to the claimant in correspondence as long ago as 2003, and further in the detailed explanations and calculations annexed to the Secretary of State's submissions to the tribunal at pages 10 to 18 of file CP 60/06, as well as in the submission of Mr D Kendall on behalf of the Secretary of State dated 18 April 2006 at pages 449 to 450, the number of years over which the claimant's earnings factors are required to be averaged for the purpose of calculating his additional pension entitlement under section 44 is defined by that section as the number of "relevant years" in his working life starting on 6 April 1978, down to and including the "final relevant year" which is the last tax year before his attainment of state pensionable age. This works out as the period of 25 years down to and including 5 April 2003. The claimant's contention that it should have been 24 is simply his own mistake or misunderstanding of the legislation.
14. The claimant's specific points on what he claims to have been a violation of his human rights are in my judgment equally unarguable. Accepting for this purpose that the accrual of pension rights is capable of amounting to a "possession" within the protection of Article 1 Protocol 1 to the Convention as well before as after the date when the pension itself vests and comes into payment, there is still no conceivable ground for saying that the legislative provisions for calculating an additional category A pension and for the offset of GMP entitlements for a person who has been in contracted out employment operate to deprive the claimant of anything. He has not had any part of his entitlement under his private occupational scheme taken away from him; nor has the way in which his GMP amount under that scheme is taken into account in calculating his category A additional pension entitlement under the state scheme removed from him anything to which he was separately entitled under that. The offset provisions are an inherent part of the definition of what, if anything, a person may become entitled to receive under the state scheme; they do not remove an entitlement that has otherwise arisen. As noted in paragraph 13 of decision CP 2291/04 they have been in the pensions legislation in substantially the same form since the inception of the present contracting-out system in 1978, and there has never been a point at which a person in this claimant's position has had any right to a category A additional pension without the GMP amount being brought into account and offset so far as applicable. As is well established, there is no inbuilt Convention right to any state benefit, and no scope for any direct claim under Article 1 Protocol 1 in a case where the right to the extra benefit sought to be obtained never arises because the conditions in the domestic legislation for it are not satisfied.
15. Nor in my judgment is there anything in the claimant's complaints of discrimination contrary to Article 14. His example of what might have happened if he had chosen to emigrate to Spain instead of continuing to work and pay national insurance contributions in this country amounts to no more than saying that if his work, residence, and years of contribution had been different, his pension rights and entitlement to category A pension under the United Kingdom legislation would have been different. Of course they would, but the legislative conditions for category A benefit would have operated in exactly the same way for anyone else on corresponding facts. That does not even amount to a difference in treatment, let alone discrimination against the claimant on the ground of his race, sex, nationality, religion, or other personal status of a kind covered by Article 14. His argument fails even to identify or allege any ground of this nature capable of getting him within Article 14, nor can it do so since his hypothetical example is all based on differences in facts and events resulting from what he himself might have decided to do. There can be no arguable claim based on the Human Rights Act in such circumstances: cf. R (Clift) v Home Secretary [2007] 2 WLR 24, 34 paras 27-8. Quite apart from that, the offset rule under section 46 Pension Schemes Act 1993 is in unambiguous primary legislation so the tribunal is bound to give effect to it in any event. There was in my judgment no arguable error of law in the tribunal chairman not having gone into the claimant's human rights assertions in more detail than he did in the statement of reasons issued to the parties on 17 November 2005.
16. I have considered all of the large volume of material submitted by the claimant but I am not persuaded it contains any other arguable point of law or anything else that calls for separate comment here. I therefore dismiss both of these appeals.

(Signed)

P L Howell

Commissioner

9 February 2007