Ill health early retirement pensions are a valuable benefit for members.
However, care must be taken in awarding ill health pensions as the rules for paying them can be complex and this is a common area for Pensions Ombudsman disputes.

The test for whether or not a member qualifies for ill health early retirement will be set out in the scheme's rules.
Failure to follow the precise wording of the test when making a decision on an IHER application may expose the decision to challenge.
For example, there are a wide range of different incapacity tests that will vary depending on the scheme rules and it is critical that the correct test is applied.
Another key point is whether the Rules automatically entitle a member to a pension or leave this to the employer's or trustees' discretion.

For an ill health pension to be an authorised payment for tax purposes, a doctor must conclude that the member is (and will continue to be) incapable of carrying on the member's occupation because of a physical or mental impairment.
The member must also have, in fact, ceased to carry on their occupation.
However, the Scheme Rules must also be checked as these may set out a more stringent ill health test.

Usually the Scheme Rules will provide for the trustees to make the decision as to whether or not an ill-health pension should be granted.
Where trustees have a decision-making responsibility, they must come to their own conclusion.
Trustees must considering all the evidence and apply it to the criteria laid down in the Scheme Rule.
Suitable medical evidence will be a key factor in the trustees’ decision-making.
In other cases the employer may play a role and in these cases it is important that the employer plays the appropriate role in the decision-making process.

Trustees need to be clear when they brief the medical adviser on precisely what needs to be established for an IHER pension to be granted and what information they need from the adviser to make the necessary decision.
If the medical adviser's report does not adequately address all the questions, then the trustees should seek further information or clarification.
The Ombudsman has often highlighted the need to obtain evidence on the likely success of untried treatments, and the timescale for these, as both may be relevant to whether a scheme's incapacity test is met.

Time is frequently critical in ill-health cases and a failure to take a decision quickly (once all the relevant evidence has been obtained) will often result in an adverse determination by the Ombudsman.
Speed can be of particular importance in some situations, such as where the member is in the final stage of a terminal illness.

Trustees should ensure the decision is made correctly and that there is an audit trail telling the full story.
If a decision is challenged, the decision-making process will need to be able to withstand scrutiny.
Records should include the information gathered and which factors were considered
Any decision-making body must clearly identify under which rule it is working.
Expert opinions are important, but any decision must be made by the body with power to do so after full consideration of all the evidence and applicable rules.
A reasoned decision should be given to the member
Any statutory appeal right should be clearly signposted.