PLH                                                                                Commissioner's File: CP 1753/02

SOCIAL SECURITY ACTS 1992-1998
	
APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL
ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Claim for:	Retirement Pension
Appeal Tribunal:  	Bristol
Tribunal Case Ref:  	U/03/186/2001/02186
Tribunal date:	4 January 2002
Reasons issued:	24 January 2002

[ORAL HEARING]	

1.	This claimant’s appeal must be dismissed, as in my judgment there was no error of law in the decision of the tribunal chairman sitting alone at Bristol on 4 January 2002, when he confirmed the earlier decision on behalf of the Secretary of State that the claimant is not entitled to any additional earnings-related category A retirement pension by reference to earnings factors for years in which he paid class 2 national insurance contributions as a self-employed earner.  
2.	The tribunal chairman was right in my judgment to hold that this is the clear effect of the relevant primary legislation contained in section 44 Social Security Contributions and Benefits Act 1992 as amended by section 128 Pensions Act 1995, for people who attained pensionable age after 5 April 2000 as this claimant did.  He was also right in holding that this result was not altered by any of the provisions of the Human Rights Act 1998, and that he had no power to make a declaration of incompatibility even if, as the claimant contended, there was some infringement of his rights under the Convention on Fundamental Rights and Freedoms; an issue which the tribunal chairman did not need to decide, and expressly recorded that he did not address.
3.	I held an oral hearing of this appeal which had been directed by another Commissioner at the claimant’s request.  He appeared and conducted his case in person and the Secretary of State was represented by Mr Vaughan Lewis of the solicitor’s office, Department for Work and Pensions.
4.	The claimant is a former self-employed person now aged 66, who elected to start drawing his retirement pension as soon as he attained pensionable age on 30 May 2001.  There is no dispute that his contribution record from his years of self-employment entitle him to the full basic category A pension, and he also has a small additional entitlement derived from some units of contribution in earlier years under the graduated retirement benefit scheme.  The only matter in dispute was whether he was also entitled to anything under the earnings-related part of the state pension scheme for years from 1978 onwards, by virtue of having a surplus of earnings factors to give rise to an entitlement to the additional component as well as the basic rate of category A retirement pension in accordance with the rules originally introduced in section 6 Social Security Pensions Act 1975 and now appearing in section 44 of the 1992 Contributions and Benefits Act as later amended.
5.	It will come as a surprise to most people to know that there can be any question of a self-employed person becoming entitled to additional pension under the earnings- related part of the state scheme (commonly known as SERPS) by reference to Class 2 contributions paid at the flat rate for self-employed earners.  That it was ever possible for this to happen depended, as the claimant acknowledged, on a quirk in the drafting of the original legislation which remained buried in it for the succeeding twenty years until removed by the 1995 Act, even though it is hard to see any rational intention behind its being there in the first place.  
6.	It arises because of the way an entitlement to the additional component of pensions is calculated by reference to what are described as “surplus earnings factors”, in broad terms ascertained by comparing the earnings levels by reference to which contributions were actually paid in each “relevant year” from 1978 onwards with a “qualifying earnings factor” defined by section 122 Social Security Contributions and Benefits Act 1992 as an amount equal to the lower earnings limit (i.e. the level at which earnings-related contributions start to be payable to SERPS by employed persons) for the last year before the pensioner attains pensionable age, multiplied by 52.  The quirk arose from the fact that until 1995 the legislation did not take account of the variations in the calendar, which mean that in every few years there are actually 53, rather than 52, weekly contributions to be paid; the result being that the required comparison of past relevant contribution years including 53-week ones with a final one done only on a 52-week calculation can throw up a small apparent “surplus” of earnings factors, which until the 1995 amendment gave even self-employed people a potential entitlement to additional component under the SERPS scheme.  
7.	There is no dispute by the department that this was the effect of the legislation, albeit probably unintended, for the first 20 years since 1975; and it was on this basis that the claimant had been notified, perfectly correctly as matters stood at that time, that he had a small additional entitlement coming to him on eventual retirement, when he was given a pension forecast by the department in 1991: the amount advised to him at that time being an extra 76p a week. 
8.	However there is equally no dispute that by the time the claimant came to attain pensionable age on 20 May 2001 the legislation had been changed and no longer included this quirk, or any possibility for a self-employed person of his age to get any additional pension from their self-employed flat rate contributions.  That was done by section 128 Pensions Act 1995 which altered the way earnings factors from self-employed contributions were to be calculated for persons attaining pensionable age after 5 April 2000, so that they had in effect to be based on a 52-week calculation for all relevant years back to 1978, thus eliminating the possibility of the comparison with the final year throwing up any apparent “surplus”.
9.	The claimant’s contentions before the tribunal and before me were that if this was the effect of the primary legislation it was unfair; it was wrong to take away retrospectively what the department itself had advised him was an “entitlement” in the pension forecast some years previously; for this not to be given after all when he came in due course to claim his pension was to deprive him of a “possession” for the purposes of Article 1, Protocol 1 to the Convention on Human Rights; further or alternatively it was discrimination under Convention Article 14 against him as a self-employed person who had not attained pensionable age by 5 April 2000, it being common ground that if he had done so before that date he would still have got the benefit of the small extra amount.
10.	It is not for me to pronounce on the rather puzzling way those responsible for these particular legislative changes appear to have handled the issue. As the tribunal chairman observed, the changes the then government introduced into the SERPS scheme in 1995 and the failure at that time to make clear to the public what was going on have been the subject of considerable dissatisfaction recently; and this particular change must have been one of the least well understood aspects to (in his phrase) “emerge from the woodwork over the last 12 months or so”.  All I can be concerned with, and as the tribunal chairman quite correctly directed himself all that he could be concerned with, is whether the removal of what would otherwise have been (under the previous law) an entitlement for this claimant was in accordance with the requirements of the legislation, and if so whether there was any overriding principle under the Human Rights Act 1998 that could give rise to any different result in the appeal before the tribunal.  
11.	In my judgment, there is no doubt that the chairman was right in answering the first of those questions in the affirmative, and the second in the negative.  The alteration of the basis of calculation in section 44(6) of the 1992 Act as amended by section 128(2) of the Pensions Act 1995 clearly applies to all relevant contribution years to be taken into account in determining whether the pensioner has a surplus of earnings factors as compared with the final relevant year, and in that sense the amendment to the calculation of any pension entitlement for which he qualifies on attaining pensionable age includes a “retrospective” element.  
12.	This change in the calculation of the pension for which he then (for the first time) qualifies is however expressly made by section 128(4) of the 1995 Act to apply in relation to any pensioner attaining pensionable age after 5 April 2000, with no relevant exception.  I agree with the tribunal chairman that it is impossible to construe these provisions as meaning other than what they clearly say, namely that for a person attaining pensionable age after that date the entire calculation has to be done in the new way and not the old.  
13.	That being the clear and unambiguous effect of the primary legislation in force at the time when this claimant’s pension entitlement came to vest and be calculated, there is no possibility of reading it in any other way, and consequently no scope for any different interpretation to be imposed for conformity with any Convention right under section 3 Human Rights Act 1998.
14.	The tribunal chairman recorded that he had not addressed the issue of whether the legislation in the 1995 Act was incompatible with anything in the Convention, and in my judgment he was clearly right not to do so.  He was entirely correct in holding that even if any arguable breach of a Convention right were involved here, he had no jurisdiction to make any declaration of any incompatibility under section 4 Human Rights Act 1998. 
15.	Neither do I:  I am not myself persuaded that the alteration of the calculation in 1995 for people who had not yet reached pensionable age (so as to take away what looks like a small unintended windfall, for which they had never in fact paid any earnings- related contributions) amounted to the deprivation of a “possession” contrary to Article 1 Protocol 1, or to discrimination contrary to Article 14 of the Convention itself; or that even if within the scope of these provisions, the particular amendments fell outside the margin of appreciation afforded to a State in this context; but for the same reasons as given by the tribunal chairman it is not necessary for me to express any concluded view on such questions.
16.	For the reasons already given, this appeal is dismissed.

(Signed)
P L Howell
Commissioner
28 April 2003