The appellant's wife was employed by South Tyneside NHS Foundation Trust. She was a member of the 1995 National Health Service Pension Scheme. In early 2018, she was informed that she had limited life expectancy and as a result, she submitted an application to commute ill health retirement benefits and sought a lump sum payment. On 3 June 2018 the appellant's wife’s application for ill-health retirement benefits had been approved at Tier 2 and she was informed that a form AW8 should be forwarded and completed as soon as possible. She died on 6 June 2018 before form AW8 was completed. Consequently, the administrator of the NHS pension scheme did not authorise the payments of the retirement benefits on the basis that: (i) that the last day of her employment, taking into account her outstanding annual leave, was 20 June 2018 and that accordingly, she had died in service; and (ii) the requirements of Regulation T1 of the 1995 Regulations had not been met because form AW8 had not been received before her death. The appellant complained to the Pension Ombudsman that the pension scheme administrator and the Trust had mishandled his wife’s application for commuted tier 2 ill health retirement benefits. Ground (i) of that decision was upheld by the Pensions Ombudsman. The appellant appealed to the High Court, who dismissed his claim. The appellant appealed further, contending that, inter alia, on the date of her death, his wife had not retired from pensionable employment for the purposes or Regulation E2A and Regulation C2(5) of the 1995 Regulations.
On the appeal—
Held, appeal dismissed. (1) It was necessary to interpret Regulation E2A and Regulation C2(5) of the National Health Service Pension Scheme Regulations 1995 in the context of the 1995 Regulations as a whole. Once viewed in that light, the proper interpretation and application of Regulations E2A(2) and C2(5) of the 1995 Regulations in the appellant's wife’s circumstances were clear. Regulation E2A(1) applied where a member “retires from pensionable employment” on or after 1 April 2008. The phrase “retires from pensionable employment” should be read and understood as a whole. The Regulation only applied to a member if they retired from pensionable employment. The relevant retirement was not retirement per se. It was retirement from pensionable employment. It was only in such a circumstance and where the further requirements of Regulation E2A(2) of the 1995 Regulations were satisfied, that the member became entitled to a pension under that Regulation. It was significant that “pensionable employment” was defined as NHS employment in respect of which the member contributed to the 1995 Scheme and that Regulation D1 stated that each member in pensionable employment ought to have contributed to the 1995 Scheme in accordance with rates set out in that Regulation (paras 25, 30–31).
(2) The natural meaning of the words used in Regulation C2(5)(a) of the 1995 Regulations, when read in context, was that pensionable employment was treated as “continuing” until the end of the period of untaken leave for which payment was made. Regulation C2(5) did not merely increase “pensionable pay” by the amount paid in lieu of untaken leave. It extended the period of pensionable employment by treating it as “continuing”. It stated that it did so not only where the member left pensionable employment but even where the member died. The extent of the fiction created was broad. Furthermore, there was no limitation on the wording which might have indicated that it was not intended to apply in the circumstances of early retirement on grounds of ill health as much as in any other situation contemplated in the 1995 Scheme. The amount paid in lieu of untaken leave was treated as pensionable pay for the period by which the pensionable employment was treated as having been continued (paras 35–36).
(3) There was a natural dichotomy between the receipt of benefits and the payment of contributions to the 1995 Scheme. The circumstances in which a pensioner could have received an NHS pension and contributed to the 1995 Scheme were very limited, therefore. In most circumstances, the pension attributable to previous pensionable employment and pensionable service would cease. There was nothing anomalous or unjust in a situation in which a person who retired early as a result of ill health, to whom Regulation C2(5) did not apply, would have become entitled to pension benefits on retirement whereas a member to whom the regulation applied would not be deemed to have left pensionable employment and would be treated as continuing to be in receipt of pensionable pay until the period of untaken leave had expired. The judge did not err in law in deciding that in the circumstances of this case, as a result of the effect of Regulation C2(5) of the 1995 Regulations, the appellant's wife’s pensionable employment was treated as continuing until 20 June 2018 and therefore, despite her employment having terminated as a result of ill health, she had not retired from pensionable employment at the date of her death. She died whilst in pensionable employment. That was the ordinary and natural meaning of the clear words in the deeming provision in Regulation C2(5) of the 1995 Regulations which ought to be applied (paras 37–38, 40).
David Schmitz (instructed by The Associate Law Firm, Newcastle upon Tyne) for the appellant.
Naomi Ling (instructed by the Government Legal Department) for the scheme administrator.