UK - The NHS Pension Scheme is facing a hefty compensation bill after it over-estimated a member's early retirement benefit.
The error was brought to the attention of the pensions ombudsman, David Laverick, by Dr Bowthorpe – a retired member of the NHS Pension Scheme.
Bowthorpe’s request for a projection of early retirement benefit estimated a pension of £21,781 and a lump sum of £61,753 if he retired in 20 months’ time – which he did.
But on retirement, it transpired the projection was incorrect – leaving him out of pocket by almost £7000 per year. Bowthorpe decided to go back to work to top up his income but he was unable to rejoin the scheme because he no longer was employed by the National Health Service.
Bowthorpe was soon after diagnosed as suffering from angina and was no longer fit to work as a full-time GP.
He told the ombudsman that had he not been misled by the NHS Pensions Agency he would not have left his job and would have been granted an enhanced ill-health pension and lump sum.
Laverick said “severe inconvenience” had been caused by the maladministration in this case and ordered the NHS to pay £500 in compensation.
He added that the scheme manager must also ascertain whether Bowthorpe – who planned to retire once his fund could provide £21,781 per annum – would have been an active member of the scheme at the time he was diagnosed as suffering from angina.
If so, the scheme would be required to pay him a pension and lump sum equivalent to the sum he would have received on ill-health grounds.
If not, the scheme would still have to pay Bowthorpe an enhanced pension and lump sum, as well as back-dating his salary plus interest to October 1998.
Laverick said: “This complaint stems from the fact that the scheme manager’s letter to Dr Bowthorpe failed to quote figures for his actuarially adjusted pension benefits.
“Dr Bowthorpe altered his position to his detriment on the basis of the misleading information provided by the scheme manager.”
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