Government Actuaries Department v Pensions Ombudsman
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE OUSELEY |
| Judgment Date | 15 June 2012 |
| Neutral Citation | [2012] EWHC 1796 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 15 June 2012 |
| Docket Number | CO/10308/2011 |
[2012] EWHC 1796 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Ouseley
CO/10308/2011
Mr M Chamberlain and Ms S Love (instructed by the Treasury Solicitor) appeared on behalf of the Appellant
Mr J Evans (Mr T Roscoe at judgment) (instructed by the Pensions Ombudsman) appeared on behalf of the Respondent
Mr Milne, the interested party, is a former fireman who retired before August 2006. He was a member of what is now known as the Firefighters' Pension Scheme. This scheme is provided for in the Firemen's Pension Scheme Order 1992 SI 129 made under the Fire Services Act 1947. Rule B7(3) in schedule 2 is the general commutation provision enabling pensioners to take a lump sum on retirement, which is the actuarial equivalent of the portion of the pension commuted "calculated from tables prepared by the Government Actuary". Mr Milne, with other firefighters, complained to the Pensions Ombudsman that the Government Actuary's Department, GAD, had been guilty of maladministration because it had not updated the actuarial tables between June 1998 and August 2006. They alleged that updated tables would have led to a greater lump sum.
The Pensions Ombudsman has jurisdiction to investigate and determine complaints under section 146(4) of the Pension Schemes Act 1993 and the Personal and Occupational Pension Schemes (Pensions Ombudsman) Regulations 1996 SI 2475. That jurisdiction applies in respect of the acts or omissions of a person responsible for the management of the scheme, which, by subsection (3), is confined to the trustees or managers and the employer. It is the regulations which enable a complaint to be made against a person "concerned with the … administration of the scheme", "an administrator" in that specific sense.
The Pensions Ombudsman has not yet considered the substance of the complaints but has rejected a preliminary point raised by GAD to the effect that he had no jurisdiction to consider the complaints. GAD contended that it was not "an administrator" within the 1996 Regulations. It was agreed that, if it were such a person, jurisdiction would exist for the Pensions Ombudsman to consider complaints about maladministration before 6 April 2005, but not if GAD were not an administrator. The Pensions Ombudsman concluded that GAD was indeed an administrator within the 1996 Regulations. It is that decision which GAD challenges in these proceedings. The statutory provisions for appeals against decisions of the Pensions Ombudsman do not apply to that decision and so judicial review is the appropriate remedy.
The GAD performs the duties of the Government Actuary. It regards itself as an independent actuarial consultancy working within government and as a pension consultancy specialising in giving advice to public bodies in the UK. Mr Chamberlain, for GAD, described it as "an independent provider of expert judgment based on statistical data", at least so far as was material to this case.
The Department for Communities and Local Government, which has responsibility for the fire services, and GAD had operated on the assumption that responsibility for commissioning reviews of actuarial tables for the Firefighter's Pension Scheme lay with the Department for Communities and Local Government. But, on 17 March 2009, Cox J in Police Federation of England and Wales v Secretary of State for the Home Department and GAD [2009] EWHC 488 (Admin) held that that was a significant error of understanding. Both sides agree that that decision is applicable to the Firefighters' Pension Scheme.
The statutory provisions
Rule B7 in schedule 2 of the Firefighters' Pension Scheme Order, which contains the scheme, permits the commutation of part of the periodical payment of ordinary, short service, ill-health or deferred pensions. Rule B7(3) reads:
"The lump sum is the actuarial equivalent of the commuted portion at the date of retirement calculated from tables prepared by the Government Actuary."
Mr Chamberlain contrasted this with rule B7(9), which leaves the calculation of the lump sum and the reduction of periodical payments to the fire authority using the tables provided by GAD.
Mr Boonin provided a witness statement on behalf of GAD. This showed many instances in the Firefighters' Pension Scheme where calculations are to be done from tables prepared by the Government Actuary and a few where the Government Actuary provides, for a fee, calculations at the request of the scheme administrators or offers specific advice. As Mr Boonin said:
"The majority of GAD's duties under the FPS consist of preparing, and revising from time to time, tables that the scheme administrators can use to calculate various actuarial values."
Rule B7 is an instance of such a duty. The tables provided by GAD would be used by the scheme administrators with some frequency. Mr Boonin expresses the effect of rule B7 as imposing a duty to prepare and revise the tables from time to time, but it is also accepted by GAD that that includes a duty to consider whether the tables need revising. This is the result of the decision in the Police Federation case.
Although that case was concerned with the lawfulness of a delay by the Home Office in introducing revised tables for the Police Pension Fund, crucial to the decision was the nature of the duty on GAD in rule B7(7) of the Police Pensions Regulations 1987, which are in materially the same terms as rule B7 of the FPS scheme. Cox J held in paragraphs 105 to 106:
"105. Whilst it is correct that there is an express obligation only on police authorities to use the tables prepared in calculating the lump sum, the Regulation clearly contemplates that there is a duty to prepare tables, to enable that lump sum to be calculated correctly and paid. Since the actuarial equivalent is liable to change over time, a judgment must be exercised periodically as to whether to revise the existing tables, to ensure that the tables to be used in calculating actuarial equivalence do in fact enable equivalence to be achieved in respect of any surrendered portion. That judgment calls for an entirely actuarial expertise and is to be exercised only by the Government Actuary. There is therefore an implied obligation upon the Government Actuary to prepare tables and, if necessary, to review and revise them, because they are needed to enable the police authorities to comply with their express obligation to use them, i.e. to make the provision work (see Padfield v Ministry of Agriculture Fisheries and Food [1968] AC 997.)
106. There is therefore an implied obligation upon the Government Actuary to identify those factors which will, in his/her judgment, give the actuarial equivalent for each officer who elects to commute and serves the notice. As the evidence shows, it is the changes in actuarial conditions (mortality assumptions and discount rates) which may lead the Government Actuary to review and revise the tables from time to time, in order to comply with this implied obligation. Whilst it is correct that Parliament has not specified the time which is to elapse between reviews, such express provision is in my view unnecessary. The express requirement in B7(7) that the tables must be such as enable a police authority to calculate a lump sum which is the actuarial equivalent of the surrendered portion is sufficient to enable the Government Actuary to determine whether, at any given time, changes are required to existing tables to enable police authorities to fulfil that obligation."
Over time, the Home Office and GAD had come to misunderstand their roles in relation to the police pension, as it appears the DCLG and GAD did in relation to the FPS until 17 March 2009, the date of judgment. There is no issue with the effect of that judgment in relation to the nature of the duty in rule B7(3) of the FPS.
The Pensions Ombudsman's powers are contained in section 146 of the Pension Schemes Act 1993. Section 146(1)(a) permits him to investigate and determine complaints of maladministration "in connection with any act or omission of a person responsible for the management of the scheme…". But by section 146(3), the persons responsible for the management of an occupational pension scheme, so far as material, are limited to trustees, managers and the employer. Section 146(4), however, provides:
"(4) Regulations may provide that, subject to any prescribed modifications or exceptions, this Part shall apply in the case of an occupational or personal pension scheme in relation to any prescribed person or body of persons where the person or body—
(a) is not a trustee or manager or employer, but
(b) is concerned with the financing or administration of, or the provision of benefits under, the scheme
as if for the purposes of this Part he were a person responsible for the management of the scheme."
I note at this stage for ease of reference the amendment made with effect from 6 April 2005 by the addition of section 146(4A):
"(4A) For the purposes of subsection (4) a person or body of persons is concerned with the administration of an occupational or personal pension scheme where the person or body is responsible for carrying out an act of administration concerned with the scheme."
It is the effect of that new subsection which caused GAD to accept before the Pensions Ombudsman that he had jurisdiction in respect of complaints of maladministration made against it after 6 April 2005, because...
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