Annette Ellis v The Cabinet Office
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Rose |
| Judgment Date | 06 June 2014 |
| Neutral Citation | [2014] EWHC 2049 (Ch) |
| Docket Number | Case No: CH/2013/02027 |
| Court | Chancery Division |
| Date | 06 June 2014 |
[2014] EWHC 2049 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mrs Justice Rose
Case No: CH/2013/02027
Ms A Ellis appeared in person
Mr J Davey (instructed by Treasury Solicitor's Department) appeared on behalf of the defendant
Approved Judgment
Ms Ellis appeals against the determination of the Pensions Ombudsman dated 28 February 2013 in which he rejected her complaint against the Cabinet Office about the removal of her reserved right to an unreduced pension from age 55 following her transfer out of the Civil Service into the private sector.
An appeal against the decision of the Pension Ombudsman lies to the High Court under section 151(4) of the Pension Schemes Act 1993 on a point of law only. The points of law that arise from Ms Ellis' appeal are, first, that in deciding the case the Pension Ombudsman took into consideration irrelevant facts and, secondly, that he has wrongly interpreted the relevant provisions of the Principal Civil Service Pension Scheme ('PCSPS') as it applies in Ms Ellis's case. The PCSPS is a statutory occupational scheme established under the provisions of the Superannuation Act 197The terms of the scheme are set out in its rules.
Ms Ellis was born in 1964 and became a prison officer in May 1986. She joined the 'Classic' section of the PCSPS and had a right to retire at age 55 without suffering a reduction in pension provided that she was then in service. She was also entitled to double service counting after the first 20 years of her service; that is after 20 years of service each further year counted as two for the purpose of accruing pension rights. In 1987 a new scheme was introduced for prison officers removing these two advantages of early retirement date and double counting. The scheme was referred to as the Fresh Start but prison officers already in service at 1 October 1987 were protected and retained those advantages. They are referred to as 'pre-Fresh Start officers'.
Ms Ellis worked in HMP Birmingham. At the end of March 2011, she was informed that the prison was going to be managed in future by a private sector contractor. A series of pension road shows took place between June and August 2011 from which it emerged that staff were being given three options regarding the benefits they had built up in the PCSPS. Option 1 was the preservation of the pension within the scheme. Option 2 was to allow staff to transfer their benefits from the scheme into the G4S scheme (G4S being the chosen private sector contractor) and option 3 allowed officers to take immediate payment of the scheme benefits with effect from the date of transfer if they were then aged 50 over. The third option was not open to Ms Ellis as she was under 50.
On 1 October 2011, the prison was transferred to the private sector to be run by G4S under an outsourcing arrangement. Ms Ellis' employment was transferred to them under the TUPE Regulations. Strictly speaking, TUPE does not apply to pension rights. However, in January 2000 the Cabinet Office had issued a document called Staff Transfers in the Public Sector, Statement of Practice Guidance. This sets out how public sector organisations should apply government policy in the treatment of bulk staff transfers between the public and private sectors. The Guidance says that where TUPE does not apply as a matter of law, employers should adopt TUPE principles for all transfers. It is accepted by the Cabinet Office, therefore, that TUPE principles apply to pensions in the public sector. For each bulk transfer, the Scheme Actuary makes an assessment as to whether the other pension arrangements are "broadly comparable" with those which the PCSPS offers.
So, Ms Ellis, along with the other prison officers, was offered the choice as to what to do with her pension. She could join a bulk transfer into the G4S pension scheme. This would mean, as that scheme is currently drafted, that she would have a right to a reduced pension at 55. Or she was offered the option of retaining a deferred pension under the PCSPS. She was told that if she chose this second option then, according to the PCSPS rules, she would not be able to take her preserved pension unreduced until she achieved the age of 60.
Ms Ellis has concerns about the G4S pension scheme. Although it seems to offer a good deal at the moment, she has noticed that it contains provisions which appear to entitle the employer to change the terms of the scheme at any time. She said in her email to the Pension Ombudsman of 13 January 2013 that she has a pension pot of 34 years which she is being invited to move to a scheme that states in the information pack provided to her that her new employer can change the benefit structure and/or contribution at some future date after due consultation with the members and the members' representatives. That information pack also states that the employer expects its scheme to continue but has the right to change it or end it at any time as long as it is acting in line with pension law in force at the time and with the scheme rules. Ms Ellis also notes that according to the information she has been given, if HMP Birmingham was to go back into the public sector, she would not be allowed to rejoin the Classic pension scheme.
Ms Ellis has, therefore, decided that her safest course is to retain her pension benefits within the PCSPS. However, she challenges the assertion that the effect of her choice is that she loses the right to receive an unreduced pension at age 55 and has to wait, instead, until she is 60.
The Scheme Rules
I turn now to the relevant scheme rules. These are set out in section II of the Rules. Rule 1.11 provides:
"1.11 'Pension age' means the earliest age at which a civil servant may retire voluntarily with a pension. For prison officers in post on 30 September 1987, the pension age is 55 (see rules 2.26 and 2.27); …. and for all other civil servants it is 60. …'
Rule 1.13 defines resignation in the following terms:
"1.13 'Resignation' means termination of service or voluntary retirement from the Civil Service before the pension age."
Rule 2.26 provides the definition of 'service as a prison officer'. That means service as a civil servant in an institution to which the Prison Act 1952 applies.
Rule 2.27 provides:
"2.27 For prison officers with service as a prison officer who were in post on 30 September 1987, the pension age is 55 (but see rule 3.12); …"
Section 3 of section II deals with retirement and death benefits. It deals with the various ways in which someone's service can stop. So, it deals first with ordinary retirement, then with partial retirement, then with retirement on medical grounds, then with death benefits for those who die in service, then with termination of pensionable service or resignation or opting out of the scheme and then with dismissal. It then covers other events short of stopping work that will affect pension entitlement such as downgrading, restructuring leading to a reduction in earnings, re-employment and other matters.
The key provision for the purposes of this case is rule 3.11 and rule 3.12:
"3.11 A civil servant who resigns or opts out of the scheme and who
a) has two or more years qualifying service
…. [other possibilities that are not relevant]
and who does not opt to transfer the whole or, under rule 6.2(iv), part of his accrued pension benefits out of this scheme, will be awarded a preserved pension and lump sum in respect of such part of his accrued pension benefits as is not transferred. Subject to rule 3.12, these will be brought into payment when the civil servant reaches the pension age, and will be calculated in the way described in rule 3.1"
"3.12...
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Civil Service Pensions And Outsourcing Early Retirement Rights
...Case Court Case - Annette Ellis v. Cabinet Office [2014] EWHC 2049 (Ch) Subject to Cabinet Office has said it will appeal this decision. Who is this decision relevant to? Public authorities with outsourced functions. Private sector outsourcing companies. Organisations with defined benefit p......