Ill-health early retirement - a warning for employers
Partner, Veale Wasbrough Vizards
In a recent decision, the Pensions Ombudsman upheld a complaint by an employee, who had been refused an ill-health early retirement (IHER) pension, against their employer on the basis of maladministration.
Mrs Danielle Staples was employed by the Ministry of Justice (MoJ) and was a member of the Principal Civil Service Pension Scheme. Due to various health conditions she was signed off on long-term sick leave.
Under the rules of the pension scheme, Mrs Staples was entitled to an immediate IHER pension if, in the opinion of the scheme's medical adviser (SMA) she had suffered a permanent breakdown in health, rendering her incapable of gainful employment or of carrying out her own or a comparative job. For these purposes, 'permanent' meant until she reached the age of 60.
The MoJ received two conflicting health reports in relation to Mrs Staples' application for an IHER pension. The MoJ's occupational health advisers (Atos) reported that Mrs Staples would be unfit to return to work by the age of 60. However, the SMA, in their report, felt that there were further treatment options which were likely to improve Mrs Staples' condition and therefore could not conclude that she met the criteria for IHER.
Despite a further report from Atos, Mrs Staples' appeal against the SMA decision and further appeal to the medical appeals board (MAB) was rejected. She was subsequently dismissed for unsatisfactory attendance (rather than IHER). Her appeals under the scheme's internal dispute resolution procedure were also unsuccessful.
The Pensions Ombudsman upheld Mrs Staples' complaint. It found that the SMA and MAB had failed to give proper consideration as to whether the treatment options available were possible in the remaining years before Mrs Staples reached pension age and whether they were expected to significantly improve her health within that timeframe.
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The Ombudsman also found that the SMA and MAB had failed to adequately explain why it had rejected the opinion of Atos, despite its status as the MoJ's occupational health adviser. Whilst decision-makers were entitled to attach more weight to one medical report over another, they were required to clarify their reasons for doing so.
The decision as to Mrs Staples' eligibility for IHER was referred back to the MoJ for reconsideration and any pension awarded was to be backdated to her dismissal date. Notably, the MoJ and pension scheme administrator were ordered to pay Mrs Staples £300 and £200 respectively for the distress caused by their maladministration.
This is an interesting decision as the Pensions Ombudsman was willing to find an employer liable for maladministration of the pension scheme as well as the scheme administrator. Findings of maladministration can be found against public sector bodies for a variety of reasons but do not apply to the private sector.
Whilst a finding of maladministration can only apply to public sector bodies (and it remains to be seen whether this case is unique to the particular pension scheme involved), the case serves as a reminder for those involved in assessing entitlement to ill-health early retirement generally. Employers should always ensure they follow proper procedures and record any decision-making processes.