South Tyneside Metropolitan Borough Council, R (on the application of) v Lord Chancellor and Secretary of State for Justice & Anor

Under the Local Government Pension Scheme Regulations 1997, regulation 77 establishes actuarial valuations and certificates but does not itself impose liability to contribute. Regulation 79 is the charging provision. A contribution to a particular pension fund can be imposed only on an authority whose employees contribute to that fund. An authority may remain an employing authority because it employs active Scheme members in another fund, but that status alone does not create liability to a different fund. Courts should not use a general appeal to fairness to reallocate liabilities in a technical statutory scheme where the regulations make no specific provision for abolished former employers.

South Tyneside Metropolitan Borough Council administered the Tyne and Wear Pension Fund. Former magistrates’ courts committees had been abolished, and their liabilities had ultimately passed to the Lord Chancellor under the Courts Act 2003. Former employees remained deferred or pensioner members of the Fund, although Northumbria Magistrates’ Courts Committee no longer employed active members contributing to it.

Actuaries issued a rates and adjustments certificate charging Northumbria Magistrates’ Courts Committee with contributions towards the Fund’s deficit. The Lord Chancellor declined to accept liability. Wyn Williams J granted a declaration that he was liable: [2007] EWHC 2984 (Admin.). The issue on appeal was whether the Local Government Pension Scheme Regulations 1997 authorised that liability.

The appeal was allowed unanimously.

1. Charging provision. Regulation 77 of the Local Government Pension Scheme Regulations 1997 requires actuarial valuations and certificates and provides for calculation of the common rate and individual adjustments. It does not itself impose liability to contribute. Regulation 79 alone imposes that liability.
2. Employing authority. Under Schedule 1, an employing authority is a body employing an employee eligible to be a member. Read with regulation 2(2), regulations 4, 7 and 8, and section 124(1) of the Pensions Act 1995, that concept concerns active membership of the Scheme. A former employee who is a deferred or pensioner member is already a member and is not thereby eligible to become a member. The Scheme must also be distinguished from its individual funds. An authority may be an employing authority because it employs active members in another fund, but that does not establish liability to a particular fund.
3. Fund-specific liability. Regulation 79, read with regulation 77, imposes liability to contribute to a particular fund only on bodies whose employees contribute to that fund. An individual adjustment under regulation 77(6) can increase or reduce contributions at the common rate; it cannot impose an adjustment on a body with no active members contributing to the fund. The additional monetary amounts in the certificate were therefore not authorised contributions under regulation 79. Regulation 77(10)(c) merely requires notification to bodies whose liability is established elsewhere; it does not itself impose liability.
4. Fairness and policy. The court declined to construe the technical pension regulations to avoid perceived injustice. The regulations made no specific provision for former employers that had been abolished. Allocation of the resulting financial burden was a matter of financial policy for the relevant authorities, not a basis for judicial construction. The declaration granted below was therefore not sustained.

• Court of Appeal (Civil Division): On 7 April 2009, the Lord Chancellor’s appeal was allowed.
• Administrative Court, Queen’s Bench Division: Wyn Williams J granted a declaration that the Lord Chancellor was liable: [2007] EWHC 2984 (Admin.).