Police scheme ill-health fine shows cost of delays

West Midlands Police Authority (WMPA) was told to award one member £150 after a delay in granting him an ill-health award caused “additional stress”.

The case demonstrates the risk of ombudsman fines and member resentment if schemes are unclear whether they or the employer are responsible for determining ill health.

Schemes should follow official guidelines and scheme rules, say lawyers and managers, and understand the difference between the employer definition of ill health and their own.

Failure to do so can harm the reputation of the scheme in the eyes of members, and ultimately cost money in fines and the administrative cost of the ombudsman process.

Case outline

In 2006, Police Pension Scheme member Richard Gardner suffered injuries to his knees during an arrest.

The WMPA stalled in considering the extent and permanence of his disability and viability for less physical jobs, such as administrative work. 

Although the outcome was not affected by the delay, the deputy ombudsman ruled it caused stress to Gardner.

Jane Samsworth, partner at Hogan Lovells, said ambiguity around this area of scheme management could be easily rectified through understanding of the rules and delegation of responsibility.

Alongside their own rules, schemes should follow HM Revenue & Customs' requirements.

These stipulate a member may take benefits at any age where the scheme administrator accepts qualified medical advice that the member meets the definition of incapacity. 

 For example, where injury, sickness, disease or disability make it impossible for the member to continue in their current occupation. 

Scheme rules may be stricter than the legislation and could state the member should be incapacitated to the extent they cannot carry out any occupation, not just the one they were previously in. 

This benefit may be reduced or stopped at any time, so it can cause contention and may be disputed by the member through the ombudsman. 

Scheme view

Managing ill-health demands is a challenge across the public and private sectors.

Brian Bailey, director of pensions at the West Midlands Pension Fund (WMPF), said problematic cases may involve members whose treatments for illness are ongoing, or are ill but without a full prognosis.

He said: “The regulations in the Local Government Pension Scheme are quite specific on the conditions in which ill health has to be met. 

“The medical officer needs to understand what the trustee says. In the WMPF there are two levels of doctor involvement."

The first level is the employer's occupational health doctor, who will form an assessment and make a recommendation.

The fund then has a panel of doctors which reviews the occupational doctor’s decision. This panel, in the WMPF, is ultimately responsible for ill-health awards. 

Scheme managers and trustees must ensure the doctors chosen have the appropriate medical expertise, are experienced in occupational medicine and in dealing with retirement cases. 

Any health consultants should also understand the regulations which define ill health. 

Bailey added: "What you’ve got to do is look at the trust deed – what does the trust deed say it’s providing in terms of ill-health benefits.

"That can obviously vary from scheme to scheme, and will be reflected in the cost of the scheme.” 

A common problem is of the employer and the trustees having a different understanding of what defines ill health.

Trustees must ensure they have a thorough understanding of where the responsibility for the decision lies regarding ill health.

They must also know the employer’s view of its position in relation to allocating ill-health benefits to avoid future complications. 

More often than not, the decision ultimately lies with the scheme’s medical consultant. 

Samsworth added: “A good starting point is to go back to the trust deed and rules and if necessary get legal advice on how best to interpret it.”