The Pensions Ombudsman has recently upheld a complaint that an employer based its decision not to award a former employee an ill-health early retirement pension on incorrect and incomplete medical information.

The Facts

Mrs B was an 'after work' member of the Barclays Bank UK Retirement Fund. Barclays Bank terminated her employment in October 2011 on grounds of ill-health.

The scheme rules stipulated that an 'after work' member could take ill-health early retirement (IHER) "at any age at the discretion of the Bank" if retirement was due to either of the following circumstances:

  • Incapacity - defined as "the situation where the Bank considers him or her permanently and totally unable to carry out any employment"

  • if the member satisfied the 'HMRC test - this meant that the member "will continue to be medically incapable… of continuing his or her current occupation…"

In both of the above cases, entitlement to IHER was conditional upon the trustee and Barclays receiving medical evidence that the member satisfied these criteria.

Following a report from July 2011 prepared by Dr Gray, of its occupational health adviser, AXA PPP Healthcare, Barclays informed Mrs B that she did not meet the criteria to receive an IHER pension. Dr Gray's report concluded that Mrs B could not be considered permanently medically unfit for work on the balance of probability as it was reasonable to expect that her condition would improve over time "with both medical and psychological evidence based interventions from her pain management specialists over time". When Mrs B appealed this decision, Dr Gray's conclusion was supported by Dr Mason, another occupation health Physician at AXA.

Mrs B provided further letters written in early 2014 from her treating doctors, but AXA's occupational health physician, Dr Tremlett, again disagreed with her doctor's prognosis. He concluded that there was no evidence that Mrs B had ever received suitable psychological support or treatment in relation to her condition, and that previous research showed that there was a reasonable expectation that individuals with her condition could adapt enough to return to work.

Mrs B approached the Pensions Advisory Service who submitted a medical certificate prepared by Mrs B's rheumatologist to Barclays stating that Mrs B should be regarded as 'handicapped' and an 'invalid'. Following a further report by Dr Westlake at AXA, confirming his colleague's opinions, Barclays rejected Mrs B's claim stating that it required evidence that there was no anticipation of improvement in her condition in order to overturn its appeal decision.

Mrs B complained to the Pensions Ombudsman that Barclays had not awarded her an IHER pension from the date her employment ended on the basis of incomplete and incorrect medical opinions.

Determination

The Pensions Ombudsman upheld this complaint, holding that Barclays must understand the reasons for the opinions of its medical experts and make a properly informed decision.

If there were any gaps in a report, Barclays should not "blindly accept it" or "simply rubber stamp the adviser's opinion". Where there had been a shortfall of information in respect of reports prepared by Mrs B's doctors, Barclays should have asked AXA to contact the treating doctors for missing information and confirmed if doing so had changed their opinions.

In particular, the Ombudsman noted that Barclays had accepted the opinions of Dr Gray, Dr Mason and Dr Westlake without knowing the treatments they had in mind, expected improvement or the likely timescale.

The Ombudsman held that these failings amounted to maladministration and the decision as to whether to award Mrs B IHER benefits was remitted to Barclays, who must first obtain a medical report from an AXA professional who had not previously been involved. This report should contain evidence-based reasons for why recovery is to be expected, if this was the conclusion.

Best Practice

This case is a cautionary tale for employers faced with conflicting medical evidence, although its scope is limited to scenarios where the employer is the decision-maker in respect of entitlement under the relevant pension scheme.

The Ombudsman made clear in his determination that in these circumstances, a decision-maker must carefully evaluate the available evidence and query any gaps or inconsistencies if necessary. Employers should satisfy themselves that they understand the evidence on which they are basing their decision.