The regulations may mean pensioners whose pensions were cut because of the North Tyneside decision could receive backdated lump sum payments as compensation. A group of 600 former Westminster City Council employees who had their pensions cut last year could stand to gain on average around £10,000 according to early estimates. The new regulations propose councils should be able to pay a lump sum of up to 66 weeks' pay. The current statutory entitlement is 30 weeks. The regulations, when finalised, are likely to form the basis of severance arrangements for staff affected by reorganisation. Redundancy provisions currently link the size of lump sum payments to age and length of service but the new draft regulations suggest no such banding, giving councils discretion.
The DoE proposes to backdate the regulations to 1 October 1992. It was then that the Audit Commission issued advice which led to councils reviewing the legality of past severance arrangements and in some cases cutting payments to pensioners. The DoE confirmed this week it intends the scheme to cover people made redundant before that date.
Around 100 pensioners of Swansea City Council and Port Talbot BC were affected when West Glamorgan CC, the superannuation authority, made cuts in pension payments of £45,000 a year. John Williams, one of the pensioners affected, lost around £750 a year from the change. He estimates if Swansea takes up the option of recalculating his lump sum entitlement following the maximum available under the regulations, he could receive a lump sum of around £10,000. If invested it could generate an income of around £400 a year. 'The draft regulations fall short of restoring the previously agreed rights. But we have to be thankful for small mercies', said Mr Williams. The Association of District Councils welcomed the possibility of compensation for pensioners but warned some councils could have difficulty finding the money. 'The key issue is that now the Staff Commission can move forward with producing a common scheme for reorganisation', said ADC Assistant Secretary Rob Pinkham.