Wilkinson v Secretary of State for Work & Pensions
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lady Justice Smith,Lord Justice Longmore |
| Judgment Date | 23 October 2009 |
| Neutral Citation | [2009] EWCA Civ 1111 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: C3 2009/0581 |
| Date | 23 October 2009 |
[2009] EWCA Civ 1111
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL
Judge Rowland
Lord Justice Longmore
Lady Justice Smith and
Lord Justice Patten
Case No: C3 2009/0581
CP/2611/2007
Mr George Wilkinson appeared in person
Mr Andrew Henshaw (instructed by DWP Litigation Division) for the Respondent
Hearing date : 15 th September 2009
Lord Justice Patten :
Introduction
This is an appeal by Mr Wilkinson against a decision of the Upper Tribunal (Judge Rowland) [2008] UKUT 33 (AAC) dated 8 th December 2008. The Tribunal dismissed Mr Wilkinson's appeal against a revised decision of the Secretary of State for Work and Pensions that he was entitled to a state retirement pension of £122.62 per week from 13 th May 2002. This was calculated on the basis of a deduction of £40.66 from what would otherwise have been his Category A pension entitlement in order to take account of the guaranteed minimum pension attributable to his membership of an occupational pension scheme that was contracted out from the State Earnings-Related Pension Scheme (“SERPS”).
The principal legislation governing the composition of state-funded retirement pensions is now contained in the Social Security Contributions and Benefits Act 1992 (“ SSCBA 1992”). Section 44 provides that:
“44 Category A retirement pension
(1) A person shall be entitled to a Category A retirement pension if—
(a) he is over pensionable age; and
(b) he satisfies the contribution conditions for a Category A retirement pension specified in Schedule 3, Part I, paragraph 5;
and, subject to the provisions of this Act, he shall become so entitled on the day on which he attains pensionable age and his entitlement shall continue throughout his life.
(2) …
(3) A Category A retirement pension shall consist of—
(a) a basic pension payable at a weekly rate; and
(b) an additional pension payable where there are one or more surpluses in the pensioner's earnings factors for the relevant years….”.
The basic state pension was introduced in 1946 but the reference to an additional pension in subsection 44(3)(b) is to the additional element of earnings related pension under the SERPS scheme. This was introduced with effect from 6 th April 1978 under the Social Security Pensions Act 1975 (“SSPA 1975”). The additional pension was intended to amount to 1.25% of earnings above the lower earnings limit in relevant years adjusted for subsequent increases in average earnings. These would therefore be earnings on which full National Insurance contributions were payable. If more than 20 such surpluses existed then the additional pension was calculated on the basis of the pensioner's earnings in the best 20 such years.
It was possible for an employee to contract out of SERPS by being a member of a salary-related occupational pension scheme which satisfied certain conditions. Until 5 th April 1997 these included the requirement that the scheme should provide its members with a guaranteed minimum pension (“GMP”). Although the basis of calculation was similar to that of the additional pension under the SERPS scheme, a GMP was calculated by reference only to earnings in contracted-out employment adjusted over the pensioner's whole working life. Certain payments which were treated as earnings for the purposes of the additional component under the SERPS scheme also did not qualify for that purpose in the calculation of the GMP under the provisions of SSPA 1975 (ss.33–36). The GMP was therefore unlikely to exceed the additional pension and could be less. If the pensioner's employment was contracted out in this way then reduced National Insurance contributions were payable by both employer and employee: see SSPA 1975 s.27.
An important aspect of the provisions of SSPA 1975 and subsequent legislation for the purposes of this appeal is that the computation and payment of a Category A pension under what is now s.44 of SSCBA 1992 was not qualified by reference to whether or not the employment had been contracted out. Under s.44(3) (and under SSPA 1975 s.6(1) which was its equivalent), the additional pension (or additional component as it was termed under SSPA 1975) depended simply on whether there had been a surplus in the pensioner's earnings factor in the relevant years. Eligibility was determined simply by reference to age and the contributions made. The consequence of this was that a person in contracted-out employment would nonetheless be entitled to the additional SERPS pension in respect of surplus earnings during his or her contracted-out years as well as to a full pension entitlement (including the GMP) under the contracted-out scheme.
Parliament addressed this in s.29(1) of SSPA 1975 as follows:
“29(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 or a widow's pension; 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 to its additional component or, if less, an amount equal to the weekly rate or aggregate weekly rates of the pension or pensions mentioned in paragraph (b) above.”
These provisions have been re-enacted in what is now s.46 of the Pensions Schemes Act 1993 (“PSA 1993”). This was a consolidation Act and it is common ground on this appeal that it did not alter the effect of s.29(1) of SSPA 1975. However, for completeness (and since it is the provision which governed the revised calculation of Mr Wilkinson's pension which is the subject of this appeal), I set it out below:
“46(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.”
The issue on the appeal
The appellant, Mr Wilkinson, was born in 1937. He was a qualified electrical engineer. From 6 th April 1985 until 31 st March 1991 he was employed by Bovis Construction Limited which was one of a number of subsidiary companies in the P&O Group. Throughout this period of employment he was a member of the Bovis Pension Fund (“the Bovis Scheme”) which was an occupational pension scheme.
In accordance with the rules of the Bovis Scheme, Mr Wilkinson's employment was contracted out of SERPS. A contracting-out certificate had been issued to Bovis Limited by the Occupational Pensions Board on 1 st March 1978 stating that employments with Bovis Limited and various related companies including Bovis Construction Limited were to be treated as contracted-out employments with effect from 6 th April 1978.
As from 1 st April 1988 various pension schemes operated by companies in the P&O Group (including the Bovis Scheme) were terminated and their assets, liabilities and members were transferred to the P&O Pension Scheme. In June 1989 the Occupational Pensions Board issued a further contracting-out certificate which confirmed that from 1 st April 1988 the employments of various stated members of the P&O Pension Scheme were to be treated as contracted-out employments. These included employments with Bovis Construction Limited. Before us Mr Wilkinson took a number of points about the effectiveness of the transfer of the members and assets of the Bovis Scheme to the P&O Pension Scheme based on what he said was incomplete or inaccurate documentation used as part of that process. But these and other similar points relating to his employment status have already been considered and determined by a Special Commissioner (Dr A.N. Brice) in a decision released on 30 th October 2006 and they are not open to Mr Wilkinson on this appeal.
Dr Brice decided that Mr Wilkinson was in contracted-out employment from 6 th April 1985 until 31 st March 1991 and that, during that period, he was liable to pay and only entitled to pay Class 1 National Insurance contributions at the reduced rate applicable to contracted-out employment. As of 31 st March 1991 when he ceased to be employed by Bovis Construction Limited, Mr Wilkinson was 53. He decided to draw his pension under the P&O scheme and has been in receipt of it since then. On 12 th May 2002 he became 65 and claimed his state retirement pension on 22 nd April 2002.
Nothing on this appeal or in the earlier proceedings before the Social Security Commissioner and in the Upper Tribunal is concerned with the calculation and payment of Mr Wilkinson's P&O pension. The appeal to the Upper Tribunal (during which Mr Wilkinson was represented by experienced pensions counsel through the FRU) was solely concerned with the calculation of his state retirement pension and, in particular, with the deduction made from it on account of the GMP received as part of his P&O pension.
Mr Wilkinson's pension is made up of a basic pension of £75.50 per week; a pre-April 1997 additional pension of £67.82; and a post-April 1997 additional pension of...
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