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Employment Law

Legal guidance - compliance - software

Veale Wasborough Vizards , 07 MAR 2016

Must employers tell employees about ill-health pension options in cases of redundancy?

Must employers tell employees about ill-health pension options in cases of redundancy?
Jenny Marley
Solicitor, Veale Wasbrough Vizards

Unless an employee applies for ill-health pension, there is no duty on the employer to advise him or her of the option to take ill-health retirement.

The facts

Mr Ascough had been employed by Worcestershire County Council (the Council). Mr Ascough had been diagnosed with a brain tumour in 2010, but had then returned to full-time work. His employment was subsequently terminated on grounds of redundancy in May 2013,

Mr Ascough later applied for and was awarded an actuarially reduced ill-health early retirement (IHER) pension Mr Ascough complained that he should have been told about the enhanced IHER pension so that he could have applied for it whilst still employed. The Council told him they could retrospectively alter the grounds of termination to ill-health, but then decided it was not appropriate. Mr Ascough died in September 2014.

The Pensions Ombudsman's decision

Mr Ascough, Mr Ascough's widow, subsequently complained to the Pensions Ombudsman. She argued that the Council should have advised Mr Ascough of the option of an enhanced IHER pension, particularly as he had taken sick leave in 2010.

The Ombudsman dismissed the complaint, as it was unable to find any maladministration on the Council's part. For Mr Ascough to be eligible for the enhanced IHER pension, his employment must have been terminated on grounds of ill-health, which it had not been. Although the Council was aware of Mr Ascough's illness in 2010, it had not been informed that his condition had worsened in 2013. The Ombudsman held that even if Mr Ascough had informed the Council about the deterioration, unless he had applied for an ill-health pension, the Council had no duty to advise him of the option to take ill-health retirement.

The Ombudsman could also find no evidence that Mr Ascough had been told by the Council that there would be no difference to his pension on being made redundant as opposed to retiring on grounds of ill-health. Any misunderstanding on Mr Ascough's part was not due to any advice from the Council. Mr Ascough was nonetheless misled by the Council when he was told that the grounds of his dismissal could be changed retrospectively.

Best practice

The Pensions Ombudsman's decision is useful in confirming that, unless a member applies for an ill-health pension, the employer is under no duty to advise him of the option of taking ill-health retirement.

However, the outcome of the complaint might have been very different had the member been dismissed on the grounds of ill-health as part of a sickness management procedure, rather than in a redundancy situation.

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