The local authority employer could have avoided a Pensions Ombudsman fine if it had properly consulted with an independent medical examiner over an ill-health retirement claim
Schemes have been urged to prioritise record keeping and liaise with medical examiners to avoid making similar mistakes.
How to avoid benefit disputes
Appoint approved independent medical examiners;
Deal with complaints swiftly;
Check scheme rules on ill-health benefits;
Keep records of all correspondence with doctors, examiners and consultants.
The most common complaints to the ombudsman by members are about people dissatisfied with their scheme’s mishandling of ill-health benefits.
Schemes failing to keep robust records or justify their medical examiner’s decision leave themselves vulnerable to investigations and similar fines by the ombudsman at a later date.
When WYP failed to correctly assess one member’s ability to work, it had to pay five years of backdated pension payments and a £600 fine for maladministration.
Brian Strutton, national services secretary at the GMB, is responsible for designing how local government pension schemes and employers deal with ill-health benefits.
He said: “There is a lot of difficulty in defining if somebody is incapable of working, or temporarily incapable of working, or unable to do their current job.”
Ill-health benefit difficulty
WYP is an employer of West Yorkshire Pension Scheme, an £8.6bn fund with more than 200,000 members.
A decision to let somebody go from the LGPS can be very expensive, so investing in some decent advice can pay off
Annemarie Allen, Barnett Waddingham
Former traffic warden Mrs Cooper took sick leave in 2003.
The fund’s medical officer suggested in 2004 she should be considered for early retirement on ill-health grounds, after first recommending office work.
During the following seven years there was dispute over whether Cooper was able to work, and if so, what the appropriate role should be.
The employer, Cooper’s doctor, a medical consultant, and the medical examiner were all involved.
Eventually WYP agreed to release the benefits, backdated only to 2011. Pensions ombudsman Tony King overturned this decision.
He said the maladministration had caused distress for more than five years after "considerable delay" in taking the decisions, and fined WYP £600.
The employer was also ordered to pay Cooper the arrears of her benefits from 2006 until 2011.
“WYP never apologised to Cooper. It was either negligent or it had decided from the start, as Cooper alleges, that it was not going to pay her a pension," he said.
“Whichever was the case, this is a sorry tale of repeated maladministration by a public body.”
Preventing dispute
To prevent future member dispute, governance procedures must be rigorous and deal with ill-health benefits promptly, according to regulations and the scheme rules.
This is a sorry tale of repeated maladministration by a public body
Tony King, ombudsman
Strutton said: “One of the problems with the WYP case is although the pension fund is very good, the actual police authority staff did not act on the initial requests – there was a failure to follow their own procedures.”
He said the problem lay in the two-year delay between the member’s line manager flagging up the problem and the proper stages of assessing Cooper.
“After that passage of time it had passed the point at which the individual could come back to work,” Strutton added.
Large employers should separate deciding on ill-health benefits from the day-to-day management of member benefits.
Approved independent medical examiners should be appointed, and all correspondence from the member’s private doctor, medical officer and examiner be collated on record.
“Make sure when people take the decision, they do so entirely based on medical opinion – not their own judgments or the views of the line management. It’s easier said than done – medical advice isn’t always very clear,” Strutton added.
Annemarie Allen, senior pensions consultant at Barnett Waddingham, said managing staff, checking the human resource policy and ensuring the right independent medical practitioner only considers medical evidence, not emotion, was vital.
“A decision to let somebody go from the LGPS can be very expensive, so investing in some decent advice can pay off,” she said.
Schemes should focus on how to keep out of the ombudsman’s sight rather than firefighting one-off appeals.
“It is a whole employment issue – keep critically reviewing the process to improve your governance, all with the idea of ensuring you make the right decisions so the right people get their ill-health retirements,” Allen said.
