Upper Tribunal (Administrative Appeals Chamber)

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

As the decision of the First-tier Tribunal (made on 23 February 2012 at Middlesbrough under reference SC227/11/03146) involved the making of an error in point of law, it is SET ASIDE under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007 and the decision is RE-MADE.

The decision is: the Secretary of State’s decision on the claimant’s pension entitlement following her 60^th birthday was correct.

Reasons for Decision

1.         This appeal highlights an error that was made in amending legislation to take account of the Government’s decision to equalise pensionable age for men and women.

A.        History and background

2.         The claimant was born on 19 July 1951. She was a teacher and retired at 55, taking her occupational pension. Sadly, her husband died in 1998. As a result, she became entitled to a widow’s pension and an additional pension inherited from him.

3.         Immediately before attaining 60, her weekly entitlement consequent upon her late husband’s death was as follows. She was entitled to her basic widow’s pension of £51.36. She was also entitled to the additional pension inherited from her late husband (£59.83) reduced by the amount of his guaranteed minimum pension (£29.26), which leaves £30.57. In total, she was entitled to £51.36 + £30.57 = £81.93 a week.

4.         She became 60 on 19 July 2011. With effect from that date, the Secretary of State decided that her entitlement changed. When she then became entitled to a guaranteed minimum pension in her own right of £38.44, this exceeded and wiped out the balance of the additional pension, leaving her with only the basic widow’s pension.

5.         The claimant exercised her right of appeal to the First-tier Tribunal, which allowed her appeal. The judge decided that the legislation, which I set out below, merely prevented double payment of more than one guaranteed minimum pension, so that no deduction should be made until the claimant attained pensionable age for state retirement pension on 6 November 2012.

6.         The judge gave the Secretary of State permission to appeal.

7.         As a result of the claimant’s response to the appeal, it appeared that she was challenging whether she was entitled to a guaranteed minimum pension. As that is a matter for Her Majesty's Revenue and Customs, not the Secretary of State, I referred the question of her pension under regulation 11A of the Social Security and Child Support (Decisions and Appeals) Regulations 1999. Her Majesty's Revenue and Customs in due course confirmed the claimant’s entitlement.

8.         The claimant’s final response is that the legislation on which the Secretary of State’s decision was based was morally wrong and acceptable.

B.        The legislation

9.         The Pension Schemes Act 1993 deals with pension schemes for claimants who contracted out of SERPS. Section 13 requires those schemes to make provision for equivalent payment by way of a guaranteed minimum pension:

13    Minimum pensions for earners

(1)     Subject to the provisions of this Part, the scheme must—

(a)     provide for the earner to be entitled to a pension under the scheme if he attains pensionable age; and

(b)     contain a rule to the effect that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 14 to 16.

…

(3)     Subject to subsection (4), the scheme must provide for the pension to commence on the date on which the earner attains pensionable age and to continue for his life.

Section 181(1) defines ‘pensionable age’:

‘pensionable age’—

(a)     so far as any provisions (other than sections 46 to 48) relate to guaranteed minimum pensions, means the age of 65 in the case of a man and the age of 60 in the case of a woman, and

(b)     in any other case, has the meaning given by the rules in paragraph 1 of Schedule 4 to the Pensions Act 1995; …

Paragraph 1 of Schedule 4 to the 1995 Act provides that women born between 6 July 1951 and 5 August 1951 attained pensionable age on 6 November 2012. But for the purposes of section 13, head (a) applies and pensionable age for a woman is 60.

10.      Section 46 provides for the effect of a guaranteed minimum pension on other pensions:

46    Effect of entitlement to guaranteed minimum pensions on payment of social security benefits

(1)     Where for any period a person is entitled both—

(a)     to a Category A or Category B retirement pension, a widowed mother's allowance, a widowed parent's allowance or a widow's pension under the Social Security Contributions and Benefits Act 1992; and

(b)     to one or more guaranteed minimum pensions,

the weekly rate of the benefit mentioned in paragraph (a) shall for that period be reduced by an amount equal—

(i)      to that part of its additional pension which is attributable to earnings factors for any tax years ending before the principal appointed day, or

(ii)    to the weekly rate of the pension mentioned in paragraph (b) (or, if there is more than one such pension, their aggregate weekly rates),

whichever is the less.

C.        Analysis

11.      A guaranteed minimum pension was generated between 6 April 1978 and 5 April 1997. It was the minimum provision that an occupational pension scheme has to provide for those who had contracted out of SERPS. The intention was that it would ensure that no one was worse off than if they had remained in SERPS.

12.      The combined effect of section 13(1)(a) of the 1993 Act and the definition in section 181(1) is that a woman’s guaranteed minimum pension becomes payable on her 60^th birthday. At the time, that was the age at which women attained pensionable age for state retirement pension.

13.      When the Government legislated to remove the difference in pensionable age for men and woman, it made detailed provision for the date on which a woman attained pensionable age. Under section 126 of, and paragraph 1 of Schedule 4 to, the Pensions Act 1995, pensionable age for men and women was progressively equalised over a period of ten years beginning with 6 April 2010. The age at which a woman attained pensionable age varied according to her date of birth. Those born before 6 April 1950 retained their pensionable age of 60. For everyone else, the date was deferred. Those born on 19 July 1951 only attained pensionable age on 6 November 2012.

14.      When these changes were made, the definition of ‘pensionable age’ in section 181(1) of the Pension Schemes Act 1993 was left in its original form. The result is that the reduction of the additional pension inherited by the claimant from her husband applied from her 60^th birthday. And the result is that she received her guaranteed minimum pension over a year before her state retirement pension. And that in turn meant that the benefit she received consequent upon her husband’s death reduced from that earlier date.

15.      I have considered the effect of the words in brackets, which mention sections 46 to 48. The effect of those words is that the pensionable age of 60 does not apply to those sections. However, the only references to pensionable age appear in section 48 and do not affect this case.

16.      The Department has accepted that this was a mistake in the legislation in that the definition in section 181(1) was overlooked. That cannot affect the law that the Secretary of State and tribunals have to apply. They have no power to dispense with a definition in the legislation. There is no basis in interpretation that would allow the plain words of head (a) in the definition to be read differently. Nor, being a provision in primary legislation, is it possible for the Upper Tribunal to rule that the definition is incompatible with the claimant’s Convention rights under the Human Rights Act 1998.

D.       Conclusion

17.      If the definition in section 181(1) had been amended to take account of the age equalisation provisions, the additional income provided by the claimant’s own retirement pension would have provided a cushion for the reduction of the amount she inherited from her husband. That was not done and the claimant has suffered as a result, but there is nothing that the Upper Tribunal can do to provide her with a remedy. That is why I have set aside the First-tier Tribunal’s decision and substituted the only decision that it could properly have given, which is to confirm the Secretary of State’s decision.