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Ill Health – The case study of Mrs S

Complaint Topic: Ill health
Outcome: Not upheld
Type: Pension complaint or dispute

Mrs S was a member of the HSBC Bank (UK) Pension Scheme (the Scheme). She had retired on the grounds of incapacity in 1999 and had been in receipt of a pension since. The pension had been subject to periodic review.

In 2017, Mrs S was notified that her pension would be reduced by 50% on the grounds that there had been an improvement in her condition. The pension was reduced gradually over a six-month period. Mrs S disagreed with the Scheme trustee’s decision to reduce her incapacity pension by 50%.

The relevant rule stated that the trustee may suspend and/or reduce an incapacity pension if the pensioner had recovered “to any extent”. The rule also provided for the trustee to accept evidence or a certificate from a qualified medical practitioner as conclusive evidence of such a recovery.

The trustee commissioned a functional capability assessment from a chartered physiotherapist and also consulted its occupational health doctor. The physiotherapist concluded that Mrs S would be capable of up to 20 hours per week of modified work. The doctor advised the trustee that Mrs S’ condition had improved “to an extent of 2 out of 4”.

Mrs S appealed the decision to reduce her pension and submitted a report from an occupational health physician. He did not agree that there had been any significant change in Mrs S’ condition or that she was fit to work in any meaningful capacity.

The Ombudsman did not uphold Mrs S’ complaint. He said the rule required the trustee to undertake two actions: (i) to determine whether Mrs S had recovered from her incapacity to any extent; and (ii) to decide whether to suspend and/or reduce her pension. The first was a finding of fact. The second was the exercise of a discretion.

The Ombudsman determined that the trustee had obtained evidence from appropriate sources in order to determine whether Mrs S had recovered to any extent. He explained that it was for the trustee to decide what weight to attach to any of the evidence available to it. The Ombudsman said it was open to the trustee to prefer the advice from its own advisers to that provided by Mrs S in the absence of any factual error or misunderstanding on the part of the advisers. No such error or misunderstanding had been identified. It was, therefore, not maladministration for the trustee to accept the advice it received from the physiotherapist and its own occupational health doctor.

The decision to reduce Mrs S’ pension involved the exercise of a discretion and this limited the extent to which the Ombudsman might interfere in that decision. His role was to consider whether the trustee had followed certain principles in making its decision. The Ombudsman determined that the trustee had followed the correct principles. In particular, he commented that the decision could not be said to be perverse. The Ombudsman explained that the benchmark for a perverse decision was set high. It had to be a decision which no other body, faced with the same set of facts and properly advising itself, could reach. In Mrs S’ case, the trustee’s decision fell within the range of possible decisions which might be made on the facts.  

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