UK - The government is cracking down on company directors who fraudulently claim early retirement through ill-health.
A clause added to the Pensions Bill includes powers to slash ill-health benefits before a scheme enters the Pension Protection Fund – even if a member has already retired.
The department for work and pensions says this will prevent unscrupulous directors claiming they are too ill to work in order to receive 100% of compensation for pensioners rather than benefits of 90% capped at £25,000 for active members.
Pensions minister Baroness Hollis said: “If the board feels that ill-health has been used as a device – and there have been cases of people ‘recovering’ from Alzheimer’s disease, for which they have been given a pension, and so on – it will consider what to do.
“The purpose of the clause is to protect the PPF from potential abuse and inappropriate awards of ill-health pensions, which is the only way in which a scheme member under normal pension age could receive a 100% level of uncapped compensation from the PPF.”
Association of Pensions Lawyers litigation committee chairman Giles Orton supported the move.
He said: “It is proper for the PPF to have these controls. It is depending on a levy from the rest of industry, so it is right that government is being scrupulous in this regard.”
However, Unison head of pensions Glynn Jenkins said the government must be careful not to cut benefits to people that truly could not continue to work in their profession due to illness.
“We have had cases where a company has gone bust and people in senior positions claim ill-health in order to get extra protection.
However, we are not in favour of cutting ill-health benefits if that person has been forced to stop work.”
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