Navigating ill-health retirement: a cautionary tale

In a recent case, the Pension Ombudsman has given some useful guidance on steering a course through the issues that await unwary employers when deciding on granting ill-health benefits in the Local Government Pension Scheme (“LGPS”).

Pension funds and employers often face something like a Herculean task when applications for release of pension benefits on the grounds of ill health are made. Faced with complex and sometimes differing medical reports, the issues are hard to navigate and the outcomes costly on many different levels. However, in a recent case, the Pension Ombudsman (“PO”) has made it clear that employers cannot shirk their responsibility to properly investigate the medical information before them, even if this information is complex and highly specialised. 

Case facts

Mr S was employed by the Manchester Airport Group (“MAG”) and was a member of the Greater Manchester Pension Fund. He complained to the PO that MAG had incorrectly refused the early release of his deferred pension on the grounds of ill health. 

For Mr S to receive this benefit under regulation 38 of the Local Government Pension Scheme Regulations 2013 he must be (1) deemed permanently incapable of discharging efficiently the duties of the employment that he was engaged in at the time that he stopped being an active member of the LGPS and (2) unlikely to be capable of undertaking gainful employment before his Normal Pension Age (“NPA”) or at least for three years (whichever was sooner) (“the limb 2 criteria”). 

In February 2018, Mr S applied to MAG for the early release of his deferred pension on the grounds of ill health.  He was 54 years old at the time and his NPA is 67.  Mr S’s complaint was supported by a letter from his GP, Dr Myneni. In this letter, he referenced reports from an orthopaedic surgeon and an Independent Registered Medical Practitioner (“IRMP”).  The surgeon noted that Mr S was “incapable of any form of work both currently and for the foreseeable future given his disabilities” and the IRMP noted that Mr S was unlikely to be able to return to his previous role on a permanent basis. Dr Myneni concluded that in his professional opinion “Mr S is highly likely to be left permanently incapable of doing the job he was doing when he left employment”. He noted that Mr S was waiting for surgery but that even if he underwent surgery there was no guarantee of the degree or speed of his improvement. On the balance of probability, Dr Myneni concluded that the likelihood of Mr S being capable of any gainful employment up until the NPA was extremely slim. 

MAG then referred Mr S to its occupational health adviser and Mr S was assessed by another IRMP, Dr Kisnha. He produced a report in August 2018 concluding, amongst other things, that Mr S had not fully exhausted all the treatments that were available for both his physical condition and his mental health. Dr Kishna stated that, at that time, Mr S was unfit for all work and on the balance of probabilities was permanently incapable of carrying out his former role. However, he noted that the further treatment options available to Mr S would most likely mean he would be medically fit enough to undertake gainful employment. These would include light manual work and office-based work. Mr S’s previous role had been an IT Communication Engineer. 

A month later, Mr S emailed MAG to inform them that he was remaining on the surgery waiting list at his current hospital. He noted that his inclination was not to have the surgery but to explore other options.   

MAG then returned to Dr Kishna for further clarification regarding the limb 2 criteria. In response, Dr Kishna stated that his opinion had not changed and that if, as Mr S had stated, he was keen to seek further treatment for his condition, then his capacity was likely to improve within the next three years so enabling him to undertake gainful employment within that period. 

MAG turned down Mr S’s application and he then initiated MAG’s internal dispute resolution process.  He was unsuccessful at both stages of this process and MAG reiterated their reliance on Dr Kishna’s opinion that should Mr S take up further treatment he would, on the balance of probabilities be capable of gainful employment at some point before his NPA. 

PO decision

The PO upheld Mr S’s complaint and made a number of comments that will be helpful to employers when making these sorts of decisions:

• when reviewing an IRMP’s advice, an employer would not be expected to challenge medical opinion;
• However, it is required to review all available medical evidence but only from a lay perspective;
• The law and the facts are matters on which a decision-maker is expected to draw its own conclusions;
• Where there where differing views between medical assessments, as there was with Mr S, the decision-maker should provide reasons as to why one was preferred over another. 
• Where there is missing information or matters are unclear, then the decision-maker will be expected to seek further information or clarification;
• Where there is further untried treatment available, the medical opinion will be expected to:
  
  • Identify that treatment;
  • Comment on the availability of that treatment;
  • Comment on how that would affect the member’s ability to undertake gainful employment;
• Where someone refuses treatment, that may be taken into account where (1) that treatment option exists, (2) it is recommended for the member and (3) they are unreasonably declining to undergo it – all of which may require the evidence of a treating clinician.

The PO concluded that MAG had not followed this guidance. Most notably, it had failed to pursue further with Dr Kishna the treatment options that were available to Mr S and the likelihood of them leading to some sort of recovery. 

For more information

For help with ill health benefit decisions or advice more generally on the Local Government Pension Scheme, contact Doug Mullen.

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