Pension Incapacity Refusal: Justify

Pension Incapacity Refusal: Justify

Trustees who fail to record why members are refused incapacity pensions are guilty of maladministration, the deputy pensions ombudsman (DPO) has decided.  G Hedley v Pearl Group concerned an application that was twice refused by the board of trustees, despite the member receiving state benefits.  DPO Charlie Gordon said whilst it was reasonable to take into account the fact that Hedley was receiving state incapacity benefits, the criteria were different between state incapacity benefits and incapacity pension under the scheme rules.

The DPO also commented that “failure to record within the scheme records the precise reasons why an application has been rejected must surely amount to maladministration”.  

Our view

This ruling has wide implications for trustees of pension schemes.  Trustees must record in depth why they made a decision even to the point of documenting word for word how a decision was reached to ensure that they comply with the rules of the pension scheme.

Useful links:

Request expert financial advice now

Purchase guidance on financial planning in the Money Shop 

Back to News Summary