The Deputy Pensions Ombudsman (DPO) has upheld a complaint against the scheme employer and administrator after delays meant a terminally ill member died before receiving a serious ill-health lump sum (SIHLS) (CAS-82342-D5V2). The employer had been aware for over 5 months that the member had only a few months to live.
The Deputy Pensions Ombudsman (DPO) has upheld a complaint against the scheme employer and administrator after delays meant a terminally ill member died before receiving a serious ill-health lump sum (SIHLS) (CAS-82342-D5V2). The amount of the death benefit payable was significantly less that the amount that would have been payable to the member as a SIHLS. The employer had been aware for over 5 months that the member had only a few months to live.
By 31 July 2020 her employer had been aware that the member had only a few months to live. The DPO found that by 1 September at the latest both the member’s employer and the scheme administrator had sufficient knowledge of the member’s case to know that they needed to provide the member with her options and then pay whatever benefit she elected “as soon as reasonably practicable” as recorded in the scheme rules. The member died on 25 January 2021 at which point the lump sum had still not been paid.
Various factors contributed to the delays in the process. The scheme administrators required a specific form to be completed by the employer before they would provide benefit figures to the member but delayed in providing the employer with the figures it needed in order to complete the form. The scheme administrator also required a separate form to be completed by one of the member’s doctors to confirm life expectancy but only raised the need for the form months after becoming aware of the member’s terminal prognosis. The member agreed an employment end date of 4 February 2021, apparently without it being explained to her that this would mean no SIHLS would be payable if she died before that date.
The DPO ordered that a lump sum be paid to the member’s estate reflecting the amount which would have been paid as a SIHLS had this been paid shortly before her death.
A SIHLS can only paid to a member who is expected to live for less than one year, so the very nature of the benefit means that time is of the essence when making arrangements for payment. This case highlights the importance of ensuring that any such lump sums are paid as soon as reasonably possible and that administrative procedures do not result in unnecessary delays.
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