Ill health pensions
Section 140: Reviewable ill health pensions
461.This section provides that during an assessment period the Board may review entitlement to ill health pensions paid under the scheme. A person under normal pension age who is entitled to an ill health pension will generally be entitled to a higher level of compensation than a person whose pension is not in payment at the beginning of the assessment period. This section enables the Board to ensure that any ill health pension has been correctly awarded.
462.Subsection (2) provides that the Board may review an ill health pension where:
the member would be entitled to pension compensation under paragraph 3 of Schedule 7 in respect of that pension;
the member is under normal pension age at the assessment date; and
the pension is attributable to the member’s pensionable service under the scheme or another scheme i.e. it is not a survivor’s or dependent’s pension.
463.Subsection (3) provides that the Board can only review an ill health pension under subsection (2) if the original decision made by the trustees or managers to award the ill health pension was made in the three years before the assessment date, or where the member had applied for ill health retirement before the assessment date, and the decision is made after that date.
464.Subsection (4) provides that where, at the assessment date, the trustees or managers have failed to decide applications for ill health retirement then the trustees or managers must decide these applications within a prescribed time. If the trustees or managers fail to do this then they may be subject to a civil penalty under section 10 of the Pensions Act 1995 (civil penalties).
465.Subsection (5) deals with rates where an application for an ill health pension is made on or after the assessment date or is made before that date but not decided in the period mentioned in subsection (3)(b). If, in the absence of this section, the award would be backdated to before the assessment date, this subsection provides that for the purposes of determining any pension compensation the award is treated as taking effect after the decision is made. As a result the person will be treated as an active or deferred member rather than a person in receipt of a pension for the purposes of Schedule 7 (pension compensation).
466.Subsection (6) provides for regulations to prescribe the procedure to be followed in relation to the review of an ill health award under this section. This procedure may, for example, require the Board to notify the scheme member in writing and give reasons for its decision
467.The definitions in section 142 are relevant to this section.
Section 141: Effect of a review
468.Where the Board decides that the conditions in section 141(3) are met, it may then determine that the compensation in respect of the pension is to be determined under the regulations rather than in accordance with Schedule 7 to the Act. It may only make such a determination within a reasonable period after the assessment period began (or the date the decision was made to pay the benefit) and before it approves a scheme valuation.
469.The conditions in section 141(3) are that:
the compensation which would be payable at the assessment date would exceed the rate of the compensation which would be payable if it was calculated under the regulations under section 141(2);
the Board is satisfied that:
the award was made in ignorance of, or based on a mistake as to, a material fact relevant to the decision;
at the time of the decision to make the award, the member knew, or could have been expected to know, that fact and that it was relevant to the decision;
had the trustees or managers known, or not been mistaken as to that fact, they could not reasonably have decided to make the award;
the Board is satisfied that the person would not have satisfied the conditions for ill health retirement after the date of the trustees’ or managers’ decision and before the assessment date. For example, if a person’s health had deteriorated significantly since the original award this provision enables the Board to consider new evidence to determine if the award could properly have been made at a later time.
470.Where the Board determines that compensation in respect of the ill health pension is to be determined in accordance with regulations under this section, compensation is payable only from the time when the scheme valuation under section 143 becomes binding (see section 145).
471.The definitions in section 142 are relevant to this section.
