Second local authority rapped over LGPS opt-out for senior officers

A second local authority in Wales has been criticised by a watchdog for allowing senior officers to receive payments equivalent to the employers’ pension contributions if they opted out of the Local Government Pension Scheme.

In a report in the public interest, Appointed Auditor and Assistant Auditor General Anthony Barrett said Pembrokeshire County Council’s decision to approve the arrangements – entered into to avoid potential tax liabilities – were unlawful.

Payments made to officers so they could make their own arrangements for saving for retirement were also “contrary to the law”, he found.

Barrett detailed a number of reasons for his findings:

• Pembrokeshire did not have the power to remunerate staff to mitigate the effect of pensions legislation;
• In making the decision, relevant considerations were not taken into account (in breach of Wednesbury principles);
• The council failed to have due regard to the public sector equality duty;
• The decision amounted to indirect discrimination;
• Senior officers who had a disqualifying personal and pecuniary interest in the decision participated in the decision making process.

The report said it was expected that a total of £51,011 would have been paid by the end of March 2014 to the chief executive and one other senior officer.

The Appointed Auditor also concluded that the payment made was not in line with Pembrokeshire’s Senior Staff Committee decision that the arrangement would be on the basis of no additional cost to the council.

Barrett said: “Pembrokeshire Council has acted unlawfully and urgently needs to rescind its decision around pensions opt-outs and stop any further payments to senior officers.

“The public should be able to expect the highest standards of decision making at local authorities and the council must now address the procedural weaknesses I have identified in my report. It needs to demonstrate to its electorate that it is operating in accordance with the law and in line with good governance principles.”

The report into Pembrokeshire’s decision was published on the same day (29 January) that Barrett issued a report into Carmarthenshire County Council’s decision similarly to allow senior officers to opt out of the LGPS.

As with Pembrokeshire, he concluded that the authority had acted unlawfully on a number of grounds.

The Appointed Auditor also called on Carmarthenshire in a second report to rescind its decision to grant its chief executive an indemnity to bring a libel counterclaim. The authority has continued to reject suggestions that it had acted unlawfully.