PEMBROKESHIRE County Council has paid out more than £50,000 to its chief executive and another senior officer in UNLAWFUL payments in a scheme to help them avoid pension liabilities, a bombshell report has said.
The damning report published today (Thursday) by the Wales Audit Office says that allowing Bryn Parry-Jones and another senior officer to opt out of the Local Government Pension Scheme (LGPS) and receive the equivalent to the employers pension contributions in direct payments was unlawful.
The decision of the council’s Senior Staff Committee to allow the move was also unlawful because senior officers, including Mr Parry-Jones, took part in the decision making process - including the meeting when the scheme was actually approved.
Up to the end of March 2014, more than £51,000 will have been paid to Mr Parry-Jones and another officer.
The payments made to them– so they could make their own arrangements for saving for retirement - were contrary to law, according to the Appointed Auditor, Anthony Barrett.
Throughout the report, Mr Barrett refers to the payments as “a pay supplement”.
The Mercury understands that while there is no obligation to pay the money back, any recovery of the money would be a matter for the council to decide upon.
The auditor’s report, running to 16 pages, concludes that the decisions taken by Pembrokeshire County Council were unlawful on a number of grounds.
They include the fact that the council did not have the legal power to pay staff to mitigate the effect of changes to pension legislation.
The scheme also failed to take into account public sector equality and amounted to indirect discrimination by only being available to a small selection of well-paid, senior staff.
Today’s report also concludes that the payment made in 2012 -2013 (£22,269 to Mr Parry-Jones) was not in line with the Senior Staff Committee decision that the arrangement would be on the basis of no additional cost to the council.
The claim that the opt-out option would not incur the council any additional costs has often been used by the council to defend the move against criticism over several months.
But Mr Barrett says he believes that there would be additional costs to the council from the scheme.
The report to the Senior Staff Committee ahead of the decision to allow the opt-out scheme is also criticised.
“No evidence was provided to demonstrate that a failure to approve the pay supplement would have adverse consequences for the council in terms of the recruitment and/or retention of senior staff.”
Mr Barrett added: “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 Labour leader on the council, Cllr Paul Miller, said the report could not be any more damning and has called for the immediate suspension of Mr Parry-Jones while a full investigation takes place.
Cllr Miller said: “This report backs up everything we have said all along. This is essentially a pay rise through the back door for the chief executive, one that we know now is unlawful.
“I have said before that this must, absolutely must cost the council money and that has been denied and denied - and today, thankfully, that has also been confirmed.
“I will be laying down a motion for the chief executive to be suspended and the payments stopped immediately. We need to get to the bottom of this as soon as possible.”
Responding to the report, Pembrokeshire County Councillor Rob Lewis, the Authority’s Deputy Leader, said: “This report deals with a number of complicated issues.
“While I note the Auditor’s views in relation to the decision taken, I am pleased he has concluded the council could take a lawful decision once a number of procedural matters have been addressed.”
Pembrokeshire County Council must now meet within one month to discuss the report.
In a separate report a similar pension opt-out scheme set up by Carmarthenshire County Council was also declared unlawful, as was a decision to grant an indemnity to the Chief Executive, Mark James, to bring a libel counterclaim against local blogger Jacquie Thompson.