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[2004] UKSSCSC CP_3833_2003 (15 March 2004)

 


CP/3833/2003

1. This appeal by the Secretary of State succeeds. In accordance with the provisions of section 14(8)(a) of the Social Security Act 1998 I set aside the decision of the Ashford (Kent) Tribunal made on 22nd May 2003 under reference U/45/174/2003/00214. I substitute my own decision. This is to that, in respect of the claim for retirement pension made on or about 22^nd April 2002, I refer to the Secretary of State the questions relating to (a) whether contributions were or should have been paid on the contracted in or contracted out basis and (b) entitlement to guaranteed minimum payment (GMP) and direct that he refer these matter to the Board of Inland Revenue for formal decision.
2. Leave to appeal having been granted by the District Chairman of the tribunal on 3^rd September 2003, I held an oral hearing of this appeal on 12^th March 2004. The claimant attended in person and was not represented. The Secretary of State was represented by Mr Lewis from the office of the Solicitor to the Department for Work and Pensions. I am grateful to both of them for their assistance.
3. The claimant was born on 12^th May 1937. He was employed from 6^th April 1985 to 31^st March 1991 by a major company and was a member of its occupational pension scheme. At the end of that time he retired from the company (at the age of 53) and started to draw his occupational pension. The Secretary of State has always maintained that the claimant and the scheme were contracted out in the particular sense that that phrase has for national insurance and state retirement pension purposes. The claimant maintains that he and it were not contracted out before he retired from the company and that he always paid the full, contracted in rate of national insurance contributions. He has produced a copy of a Contracting Out Certificate, which was issued by the Occupational Pensions Board on 9^th October 1995, certifying that the scheme was to be treated as a contracted out scheme. The Certificate states that this was "with effect from the start of 01/04/88". Amongst other matters the claimant argues that the certificate cannot have retrospective effect.
4. In due course he received a forecast of his state retirement pension entitlement, estimated as at 25^th October 2000, which, to put it simply, treated him as having always been contracted in. On 22^nd April 2002 he claimed state retirement pension and this was awarded as from his 65^th birthday on 12^th May 2002. The amount awarded was considerably less then forecast because it treated him as having been contracted out and took into account the contracted out deductions (COD) and the GMP. The claimant appealed against the decision of the Secretary of State relating to the amount of state retirement pension payable and the matter came before the tribunal, which adjourned on 3^rd March 2003 and finally made a decision on 22^nd May 2003.
5. The decision of the tribunal was:

"There are to be no deductions known as Contracted Out Deductions to be made from [the claimant's] Retirement Pension. The tribunal can find no authority for deducting the total of his Guaranteed Minimum Payment, to which he has contributed from his total pension entitlement. The tribunal finds that there was no contracting out of National Insurance Contributions and that [the claimant] paid full contributions throughout the entire period that they were due".

6. Its findings of fact included a finding that the claimant "was a member of a contracted out occupational pension scheme". Its reasons included a statement that section 46 of the Pension Schemes Act 1993 (which provides for the relevant deductions) did not apply to the claimant as his scheme predated 1993 and was covered by the Social Security Pensions Act 1975. The reasons also stated:

"There was an option for a person to contract out of the Government scheme if he was a member of an occupational pension scheme and this was the case with [the claimant]. He was entitled to a guaranteed minimum pension from his employers contracted out scheme as a result of his contributions to it, on retirement of £40.98 per week".

7. Of course these findings of fact and reasons are inconsistent with the wording of the decision that I have quoted above. On 25^th August 2003 the chairman of the tribunal "corrected" the findings of fact to remove any reference to the claimant being member of a contracted out occupational pension scheme but to insert a finding that the claimant was a member of the state additional pension scheme. No correction or change was made to the reasons for the decision.
8. Leaving aside the question of whether the chairman had the power to make such a change to the findings of fact, it is clear that on the first version the findings and reasons were inconsistent with the decision, and that on the second version the findings and decision were inconsistent with the reasons. That alone would mean that I had to set aside the decision of the tribunal as having been made in error of law.
9. There also seems to have been a further error of substantive law. The claimant relied on sections 30 to 32 of, and paragraph 2 of schedule 2 to, the Social Security Pensions Act 1975. However, schedule 5 to the Pension Schemes Act 1993 repealed a large part of the 1975 Act, including sections 26 to 58B. I am not aware of any savings provisions that would support the argument made by the claimant and accepted by the tribunal to the effect that this did not apply to him because he entered the occupational pension scheme (or drew a pension from it) before the 1993 Act took effect, and no such provision has been cited throughout this case. Paragraph 2 of schedule 2 to the 1975 Act authorises the making of regulations in relation to the retrospective effect of Contracting Out Certificates, but makes no provision itself.
10. However, I am not really in a position to do anything pursuant to the above analysis, because there was an overarching error made by the tribunal as to its jurisdiction. Section 8 of the Social Security Contributions (Transfer of Functions, etc Act) 1999 provides that it is for an officer of the Board of Inland Revenue to decide, among other matters, whether a person is or was liable to pay contributions of any particular class and if so the amount that he is or was liable to pay (section 8(1)(c)) and to decide whether contributions of a particular class have been paid in respect of any period (section 8(1)(e)). In my view that must include decisions as to whether a claimant was liable to pay and did pay contributions on the basis of being contracted out or contracted in. Section 11 of the 1999 Act then provides for an appeal against such a decision to go to the tax appeal Commissioners (not to one of the tribunals over which the Social Security Commissioners have jurisdiction).
11. It is also for the Board of Inland Revenue to determine entitlement to a GMP in respect of each occupational pension scheme. Appeals against such determinations do lie to the tribunals over which the Social Security Commissioners have jurisdiction, and then to the Social Security Commissioners, but there must first be a formal determination and notification with notice of appeal rights (section 170 of the Pension Schemes Act 1993 and CP/4479/2000 final decision).
12. Regulation 11A of the Social Security and Child Support (Decisions and Appeals) Regulations 1999, so far as is relevant, provides as follows:


11A(1) Where, on consideration of any claim or other matter, it appears to the Secretary of State that an issue arises which, by virtue of section 8 of the Transfer Act, falls to be decided by an officer of the Board, he shall refer that issue to the Board.

(2) …

(3) Pending the final decision of any issue which has been referred to the Board in accordance with paragraph (1) or (2) above, the Secretary of State may –

(a) determine any other issue arising on consideration of the claim or other matter or, as the case may be, of the application,

(b) seek a preliminary opinion of the Board on the issue referred and decide the claim or other matter or, as the case may be, the application in accordance with that opinion on that issue; or

(c) defer making any decision on the claim or other matter or, as the case may be, the application.

(4) On receipt by the Secretary of State of the final decision of an issue which has been referred to the Board in accordance with paragraph (1) or (2) above, the Secretary of State shall -

(a) in a case to which paragraph (3)(b) above applies -

(i) consider whether the decision ought to be revised under section 9 or superseded under section 10, and

(ii) if so, revise it, or, as the case may be, make a further decision which supersedes it; or

(b) in a case to which paragraph (3)(a) or (c) above applies, decide the claim or other matter or, as the case may be, the application,

in accordance with the final decision of the issue so referred.


(5) In paragraphs (3) and (4) above "final decision" means the decision of an officer of the Board under section 8 of the Transfer Act or the determination of any appeal in relation to that decision.

13. Regulation 38A of the Social Security and Child Support (Decisions and Appeals) Regulations 1999, so far as is relevant, provides as follows:

38A(1) Where, on consideration of any appeal, it appears to an appeal tribunal that an issue arises which, by virtue of section 8 of the Transfer Act, falls to be decided by an officer of the Board, that tribunal shall -

(a) refer the appeal to the Secretary of State pending the decision of that issue by an officer of the Board; and

(b) require the Secretary of State to refer that issue to the Board;

and the Secretary of State shall refer that issue accordingly.

(2) Pending the final decision of any issue which has been referred to the Board in accordance with paragraph (1) above, the Secretary of State may revise the decision under appeal, or make a further decision superseding that decision, in accordance with his determination of any issue other than one which has been so referred.

 (3) On receipt by the Secretary of State of the final decision of an issue which has been referred in accordance with paragraph (1) above, he shall consider whether the decision under appeal ought to be revised under section 9 or superseded under section 10, and –

(a) if so, revise it or, as the case may be, make a further decision which supersedes it; or

(b) if not, forward the appeal to the appeal tribunal which shall determine the appeal in accordance with the final decision of the issue so referred.

(4) In paragraphs (2) and (3) above, "final decision" has the same meaning as in regulation 11A(3) and (4).

I have set out these provisions here for the convenience of the parties and to show the decision making scheme.

14. It seems to me (and following on from what Mr Commissioner Williams said in paragraph 43 of CP/4479/2000, especially step four) that since this appeal involves a contribution question, the Secretary of State must be directed under regulation 38A to refer the matter to the Board of Inland Revenue for a formal decision, with appeal rights to the tax appeal Commissioners. Since it also involves a dispute about the claimant's entitlement to a GMP, the Secretary of State must also be directed under regulation 38A to refer that matter to the Board of Inland Revenue for a formal decision, but with appeal rights to the appeal tribunal and thence to the Social Security Commissioner. Once those issues are resolved the Secretary of State must make a final decision on the amount of entitlement to state retirement pension, against which there also appeal rights to the appeal tribunal and thence to the Social Security Commissioner, but not in respect of the Revenue determinations on the contributions and GMP questions.

H. Levenson

Commissioner

15^th March 2004