Council Liable For Losses Due To Teacher's Reliance On Incorrect TPS In-Service Death Benefits Statements

Late teacher's estate awarded damages for school's failure to inform the TPS that she had exhausted sick pay and was not in pensionable service

The impact of long term absence on pensionable service under the Teachers' Pension Scheme (TPS)

Under the rules of the Teachers' Pension Scheme (TPS), a teacher will not be in "pensionable service" once he or she receives less than half rate sick pay. The scheme also provides that a death in service grant will not be payable if a member dies more than 12 months after leaving pensionable service.

Case: The Estate of Mrs S (Pensions Ombudsman)

Mrs S was a part time teacher employed by Liverpool City Council at St Paul's Catholic Junior School. She developed a melanoma and had periods of long term sickness absence. She expressed a wish to return to work, but unfortunately her condition worsened and she was unable to do so. Eventually, she exhausted her sick pay entitlement. The school governing body agreed with Mrs S that she could remain on payroll on no pay. The council continued to report to the TPS that Mrs S was an employee.

Mrs S received statements from the TPS (one five months and another 16 months after her sick pay ended). Both stated that she was in pensionable service and would be entitled to a death in service grant of around £114,000. She found out that her condition was terminal but decided not to apply for ill-health early retirement because she thought her family would be better off if she died in service.

Following her death, Mrs S's husband received notification that a death grant of £18,703.62 was payable, along with an annual spouse's pension and long term children's pension, each of around £3,000. When he was not able to resolve his complaint with the TPS, he complained to the Pensions Ombudsman.

The Pensions Ombudsman decision

The Ombudsman decided that Mrs S had relied on the TPS statements in her decision not to apply for ill-health retirement and that she was unaware of the amount which would have been available to her if she had taken ill-health retirement and commuted her benefits.

The TPS submitted that it was very likely that Mrs S would have been accepted for enhanced ill-health retirement benefits, given that her condition was terminal. It calculated that, along with annual pension payments, she could have commuted her ill health benefits for a tax-free lump sum of just over £100,000.

The Ombudsman found that the TPS guidance to employers about what was meant by...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT