Local Government Pension Scheme IHR
The Local Government Pension Scheme (LGPS) represents one of the larger pension schemes across UK. More importantly, the regulations allow for hundreds of occupational physicians to provide opinions to employers in a system that is largely unregulated, working as Independent Registered Medical Practitioners (IRMP). The only stipulation is that any occupational physician providing an opinion is appropriately qualified, registered with the GMC, independent and approved by the pensions authority. There are no training requirements or quality control systems unless specifically set up by pensions authorities or employers.
As noted in the general guidance on working as a pensions advisor, the cost implications are substantial. If one doctor acting as IRMP recommending a hundred cases a year for pensions gets half of these decisions wrong, the cost to the pensions authority could be in the region of £7M per annum.
The Association of Local Authority Medical Advisers (ALAMA) provides advice with a training session run at each conference (currently one a year), however many IRMPs are either not members of ALAMA or never attend these conferences, and there is no follow-up system of audit to ensure that opinions are appropriate, and evidence based.
The LGPS scheme is complex. The regulations have changed three times in the past three decades. While the changes appear subtle, they are significant, and IRMPs need to understand which set of regulations to apply and how to do so. The regulations require ‘a certificate’ and do not require a report, although general guidance for pensions assessments recommend a report too.
There is no statutory format for a certificate, although the Local Government Association recommends a format. Different pensions authorities use different certificate formats and may insist that only theirs can be used.
The regulations require a sequence of steps in order to determine eligibility, however it is clear from many opinions provided by IRMPs that they don’t understand the order in which these steps should be undertaken and how to assess cases. It is also clear that many employers do not understand the regulations and are either misled by IRMPs who also don’t understand the regulations, or the employer will seek out an IRMP who gives them the opinion they want rather than expecting an objective evidence-based opinion.
When I undertook a review of the LGPS between 2008 and 2010 when I had just taken over as Local Authority Representative on the ALAMA Committee, I presented my findings to Central Government, the then Department of Communities and Local Government (DCLG). They acknowledged the likely over-spend per annum of around £100M just for England and Wales, but also pointed out that ‘this is not our problem, it is a problem for Local Government’. Few local authorities are concerned. Some larger pensions authorities such as Greater Manchester and South Yorkshire have put in place systems to limit or manage IRMPs but no comprehensive audit process has been set up to ensure quality and consistency.
The Regulations
The current regulations for England and Wales are the Local Government Pension Scheme Regulations 2013. In Scotland, the relevant regulations are the Local Government Pension Scheme (Scotland) 2018, and in Northern Ireland they are the Local Government Pension Scheme (Northern Ireland) Regulations 2014. In each case, the regulations became active the following April.
In addition, DCLG produced statutory guidance for ill health retirement in September 2014. IRMPs must ‘have regard to this guidance’ when carrying out their functions under Regulations 36-38 of the 2013 Regulations. Additional guidance was also produced in 2011 and in 2014.
England and Wales
The legal framework states specifically how a member of the scheme can qualify for early payment of retirement pension on ill-health grounds. Terms are defined in Schedule 1 of the Regulations.
35. (1) An active member of the scheme who has qualifying service for a period of two years and whose employment is terminated on the grounds of ill-health or infirmity of mind or body before that member reaches normal pension age is entitled to and must take early payment of a retirement pension if that member satisfies the conditions in paragraphs (3) and (4) of this regulation.
(2) The amount of the retirement pension that a member who satisfies the conditions mentioned in paragraph (1) receives, is determined by which of the benefit tiers specified in paragraphs (5) to (7) that member qualifies for, calculated in accordance with regulation 39 (calculation of ill-health pension amounts).
This means exactly what it says; the applicant must satisfy the conditions in paragraphs (3) and (4). These state:
(3) The first condition is that the member is, as a result of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment the member was engaged in.
(4) The second condition is that the member, as a result of ill-health or infirmity of mind or body, is not immediately capable of undertaking gainful employment.
‘Permanently incapable’ means that the member will, more likely than not, be incapable until at the earliest, the member’s normal pension age.
‘Gainful employment’ means paid employment for not less than 30 hours in each week for a period of not less than 12 months.
An applicant may be very unwell at the time of application, however the IRMP must consider the normal expected recovery for the condition. If there is a period of several years before normal pension age, recovery would be more likely than if they are only a few months before normal pension age.
It is important to consider the evidence carefully. Some applicants will report severe symptoms but without any evidence of significant pathology. It is generally inappropriate to recommend ill health retirement when there is no underlying disease process identifiable. There may be conditions where no disease can be demonstrated such as mental health conditions, and in most cases, there are good published studies giving clear expected statistical outcomes. One episode of severe depression or anxiety for example is expected to recover within a few months, while a history of recurrent and more severe episodes over a prolonged period may indicate that permanence is met.
The most controversial area is for conditions defined as ‘functional’ or ‘medically unexplained’ where the individual reports severe symptoms such as enduring fatigue or pain without any evidence of disease. It is common to find a history of substantial stress preceding such events, and a history of past episodes with a good recovery. Any opinion in relation to permanence must consider the overall picture, the history of past illnesses and their course, and likelihood of recovery sufficient to work in future. In these cases, it is important to recognise that symptoms may well persist long-term but functional recovery may be expected. The test is not about longevity of symptoms but of future capacity for work. Many individuals with a history of chronic fatigue or chronic pain return to employment, often after a few years. When considering published evidence, it is important to distinguish between objectively reported pathology, subjective symptoms, beliefs and behaviours. Any IRMP considering cases such as these should have a thorough understanding of the natural history of these conditions, the evidence base, the psychosocial issues often seen, and the impact of other factors including family, friends, self-help groups and the media. The current issue of Long-COVID falls into this group, and many of the reported scientific studies relating to Long-COVID are fundamentally flawed or misinterpreted.
(5) A member is entitled to Tier 1 benefits if that member is unlikely to be capable of undertaking gainful employment before normal pension age.
(6) A member is entitled to Tier 2 benefits if that member—
(7) Subject to regulation 37 (special provision in respect of members receiving Tier 3 benefits), if the member is likely to be capable of undertaking gainful employment within three years of leaving the employment, or before normal pension age if earlier, that member is entitled to Tier 3 benefits for so long as the member is not in gainful employment, up to a maximum of three years from the date the member left the employment.
The assessment must therefore first consider whether the two conditions are met, that of permanence and not being immediately capable of gainful employment. If both are not met, the applicant is not eligible for IHR. A common mistake is to ignore this and recommend one of the three Tiers. This contravenes the Regulations.
If both are met, the IRMP must consider which Tier is appropriate. In many cases the applicant is currently too unwell to work but is either awaiting specific treatment or is recovering. After recovering they would have to be capable of reliable and effective service (without substantial sickness absence) or they should qualify for Tier 1. Most conditions will recover well within three years, so a Tier 2 award should be a rare occurrence. It may be appropriate when several surgical procedures are needed such as two knee replacements, there are long waiting lists and the patient will have to recover between each procedure.
The regulations require a review of Tier 3 benefits after eighteen months. The options are to continue payment of Tier 3 benefits, to award Tier 2 benefits, or to cease payments. The IRMP will therefore need to determine whether the member is now capable of gainful employment, or likely to recover and return to gainful employment within the remaining three years, or unlikely to recover and return to gainful employment within the remaining three years. There is no option to award a Tier 1 at this stage. The IRMP may, under Regulation 37 (11) be the same one who originally provided the Tier 3 certificate.
The role of the employer is made very clear in Regulation 36 (1); a decision as to whether a member is entitled… shall be made by the member’s Scheme employer.
The role of the IRMP is defined in Regulation 36. The IRMP shall provide a certificate noting whether the member satisfies the conditions in Regulations 35 (3) and (4), and if so how long the member is unlikely to be capable of undertaking gainful employment. The IRMP should also note whether the member was in part-time service wholly or partly as a consequence of ill-health or infirmity of mind or body.
‘IRMP’ is defined as an independent registered medical practitioner who is registered with the GMC and holds a DOccMed, or an equivalent qualification issued by a competent authority in an EEA state, or is an AFOM, MFOM or FFOM or equivalent from an EEA state. The pensions authority must, under Regulation 36 (3), approve the choice of IRMP. Regulation 36 (2) defines ‘independent’ by stating that an IRMP must not have previously advised, or given an opinion on, or otherwise been involved in the particular case for which the certificate has been requested.
The employer and IRMP must, under Regulation 36 (4), have regard to guidance given by the Secretary of State when carrying out their functions. There are three sources of guidance, the Statutory Guidance published in September 2014, the Supplementary Guidance published in June 2011 and the Frequently Asked Questions published in July 2011.
Deferred benefits
A member of the pension scheme who has already left employment may apply for early payment of deferred benefits. It is important to clarify whether the date of leaving was sufficiently recent to make an IHR determination more appropriate; failure to do so could be considered maladministration.
Again, the employer must obtain a certificate from an IRMP who shall determine under Regulation 38 (3) whether the member is suffering from a condition that renders the member
A member who has already been in receipt of a Tier 3 award may subsequently apply for deferred benefits, and under Regulation 38 (8) the IRMP may be the same IRMP who provided the certificate for the Tier 3 award.
Severe Ill-Health Test
Most ill-health pension payments involve an additional contribution to the pension fund, and that has tax implications. Where a ‘severe ill-health test’ is met, this taxation is waived. IRMPs are therefore also expected to give an opinion on that test which has nothing to do with the remaining LGPS regulations. The test is that the applicant must be:
Unlikely to be able, otherwise than to an insignificant extent, to undertake gainful work in any capacity before pensionable age.
This definition has been clarified by NHSBSA as:
The individual could undertake voluntary work or unpaid work where out of pocket expenses are reimbursed or small amounts of travelling or subsistence payments are made.
Any paid work should be insignificant, for example it should be infrequent or only for a few days during the year and the payment must be small in amount, not just as a proportion of previous pay or salary.
While not stated in the guidance, in my opinion it would be reasonable to consider whether the reduced amount they would receive after taxation is still more than they could earn. It would seem inappropriate and unfair for them to be significantly financially penalised in such a way.
When considering capability of undertaking any work, it is important to consider the duration that the applicant is likely to remain capable. They may be currently capable of working ten hours a week which could be considered more than insignificant, however if they are expected to become incapable of that within a few months and remain incapable to normal pension age, it would be reasonable to consider the test met. This is particularly relevant for those with a very limited life expectancy when they would clearly be incapable of any work from the point of death to normal pension age.
Narrative report
There is no requirement for a narrative report within the Regulations. There is, however, a requirement for the decision to be made by the employer not the IRMP. In order that the employer is in a position to consider the merits of the application rather than just blindly following the IRMP certificate, they must have an understanding of the medical issues, in order to ensure that the IRMP has provided a reasonable opinion. This can only be achieved if they also have a narrative report to support the certificate. This report must have sufficient and clear medical evidence to support the IRMP opinion. The recommended format for such a report is included in the general notes on IHR.
LGPS (Northern Ireland) regulations 2014
To follow
LGPS (Scotland) regulations 2018
The Scottish regulations are substantially different to those for England and Wales. Many would argue that they are clearer and fairer. They are supported by a detailed guide produced by the Scottish Public Pensions Agency. Terms are defined in Schedule 1 of the regulations.
Unlike the regulations and guidance for England and Wales, there is a specific requirement for a report, including a list of the evidence considered, consideration in writing of the probable effect of untried treatments and an opinion ‘on balance of probabilities’.
Ill health retirement
34. Early payment of retirement pension on ill-health grounds: active members
34.-(1) An active member who has qualifying service for a period of 2 years and whose employment is terminated by a Scheme employer on the grounds of ill-health or infirmity of mind or body before that member reaches normal pension age, is entitled to, and must take, early payment of a retirement pension if that member satisfies the condition in paragraph (3) of this regulation.
This means exactly what it says; the applicant must satisfy the condition in paragraph (3).
(2) The amount of the retirement pension that a member to whom paragraph (1) applies, is determined by which of the benefit tiers specified in paragraphs (4) and (5) that member qualifies for, calculated in accordance with regulation 37 (calculation of ill-health pension amounts).
(3) The condition is that the member is, as a result of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment the member was engaged in.
(4) A member is entitled to Tier 1 benefits if that member is unlikely to be capable of undertaking gainful employment before reaching normal pension age.
(5) A member is entitled to Tier 2 benefits if that member is likely to be able to undertake gainful employment before reaching normal pension age.
‘Permanently incapable’ means that the member will, more likely than not, be incapable until at the earliest, the member’s normal pension age.
‘Gainful employment’ means paid employment for not less than 30 hours in each week for a period of not less than 12 months.
An applicant may be very unwell at the time of application, however the IRMP must consider the normal expected recovery for the condition. If there is a period of several years before normal pension age, recovery would be more likely than if they are only a few months before normal pension age.
35. Role of the IRMP
35.-(1) A decision as to whether a member is entitled under regulation 34 (early payment of retirement pension on ill-health grounds: active members) to early payment of retirement pension on grounds of ill-health or infirmity of mind or body, and if so which tier of benefits the member qualifies for, shall be made by the member's Scheme employer after that authority has obtained a certificate from an IRMP as to-
(a) whether the member satisfies the condition in regulation 34(3); and, if so
(b) whether the member is unlikely to be capable of undertaking gainful employment before normal pension age.
(2) An IRMP from whom a certificate is obtained under paragraph (1) must not have previously advised, or given an opinion on, or otherwise been involved in the particular case for which the certificate has been requested.
(3) If the Scheme employer is not the member's appropriate administering authority, it must first obtain that authority's approval of its choice of IRMP.
(4) The Scheme employer and IRMP must have regard to guidance given by the Scottish Ministers when carrying out their functions under this regulation and regulation 36 (early payment of retirement pension on ill-health grounds: deferred members).
The Scottish regulations have this additional requirement, that the IRMP must have regard to the guidance. This lays down specific additional steps that must be taken:
The IRMP must review all available evidence, including any reports that are due to be provided to the member by their consultant/specialist. The IRMP should then provide advice to the employer, including a consideration of treatments that have yet to be tried. The employer should review the available evidence as well as the certificate provided by the IRMP before making a decision about ill-health benefits.
Note that ‘all available evidence’ must be reviewed, including reports due to be provided; if the applicant has recently seen a specialist or had an investigation and reports or results are awaited, any decision must be delayed until these are available.
There is a requirement for the IRMP to provide a written report that also considers treatments that have yet to be tried.
The employer should (not must) review the available evidence as well as the certificate. It is therefore expected that copies of the medical reports and records will be provided to the employer, with scope for the IRMP to select those appropriate and redact or remove those not appropriate for the employer to see. Clinical judgement should be used in these circumstances.
The guidance goes on to require the first instance decision-maker (the employer for active members and the administering authority for deferred members) to:
Obtain all relevant medical information from the member and commission further reports as necessary.
This is to ensure that an IRMP is given access to all available evidence in order to provide a report indicating whether they believe that the member meets the criteria for ill-health retirement; according to the Regulation 34.
The expectation is that this task would be delegated to the occupational health provider.
The first instance decision-maker should follow a checklist that is replicated on the certificate for the IRMP to complete as follows.
Specific guidance to the first instance decision-maker includes:
All medical evidence taken into consideration should also be listed on the certificate.
If there is uncertainty about the prognosis, due to other treatments which have yet to be tried, the first instance decision-maker must ask the IRMP to provide professional opinion as to the expected efficacy of those treatments. If there are specialist reports due to be provided, the decision-maker must take these into account before making a decision.
Upon receipt of the certificate and report from the IRMP, the First Instance decision-maker should weigh up the report along with all of the evidence, and make a decision based on these and applying the right test i.e. not the criminal law test of “beyond a reasonable doubt”, but the civil law test of “on the balance of probabilities”.
The decision-maker must consider all relevant facts. He/she has the right to give more weight to some evidence than others when considering their decision, i.e. a specialist report may hold more weight than the opinion of a GP, but the advice of an occupational expert may override both.
Deferred benefits
36. Early payment of retirement pension on ill-health grounds: deferred members
36.-(1) A deferred member who, because of ill-health or infirmity of mind or body-
(a) becomes permanently incapable of discharging efficiently the duties of the employment that member was engaged in at the date the member became a deferred member; and
(b) is unlikely to be capable of undertaking gainful employment before normal pension age.
may ask to receive payment of a retirement pension whatever the member's age.
(2) A request under paragraph (1) must be made in writing to the deferred member's appropriate administering authority.
(3) Before determining whether or not to agree to a request under paragraph (1), the deferred member's appropriate administering authority must obtain a certificate from an IRMP as to-
(a) whether the member is suffering from a condition that renders the member permanently incapable of discharging efficiently the duties of the employment the member was engaged in because of ill-health or infirmity of mind or body; and, if so
(b) whether as a result of that condition the member is unlikely to be capable of undertaking gainful employment before reaching normal pension age.
Of note, there is only one tier of award, and an applicant is only eligible if they fulfil both criteria, permanently incapable of their former role and permanently incapable of gainful employment.
IDRP Appeal
If there is an appeal under the Internal Dispute Resolution Procedure (IDRP), the guidance specifically notes:
An appointed person responsible for IDRP stage 1 must complete a review of the previous decision based upon a new report provided by an independent OH provider who should review all previous and any new medical evidence. The Appointed person should review all available evidence as well as the certificate provided by the IRMP before making a decision about ill-health benefits.