Stress claims are coming to grief

As teachers find it increasingly difficult to take early retirement on grounds of ill health, insurers are emphasising the need for private provision
IT IS back to school for teachers after the Christmas break, whether suffering from stress or not. Teachers looking to retire early because of stress-related illness are being told that the government-run Teachers Pension Agency (TPA) may be taking an increasingly harsh line on claims for invalidity pensions. Insurers say it could be time to consider private insurance.

The National Union of Teachers says it is seeing a disproportionate number of stress-related applications for retirement being rejected and claims that the TPA has tightened up its reviewing of cases where people are already being paid pensions.

A recent report by the National Audit Office, the government accountants, said the number of applications for retirement on grounds of ill health that had been rejected rose from 3 per cent to 10 per cent last year. The figures were not broken down between stress-related and other claims but the audit office noted that medical criteria were being applied "more consistently and rigorously". The pension agency denies any change in policy but will not release figures for stress-related claims and how many of them are rejected.

But retirement on health grounds has risen dramatically and is putting an increasing strain on the public purse and local authorities, which are being forced to contribute more to the teachers' pension scheme.

One Your Money reader, a 46-year-old primary school teacher from Nottingham, says she has been fighting for more than a year to win an invalidity pension from the TPA after having to give up work because of the effects of surgery and the cumulative effect of work-related stress.

She said: "Despite a succession of medical tests and requests for further evidence I am in limbo. I receive no pay but I am still technically employed and so state benefits are out of the question. They will not sack me because that requires a three-month reinstatement first, and presumably they don't fancy the cost, and so in the meantime I am living on my savings while the documents go back and forwards.

"I know for a fact that six years ago there was a much more sympathetic attitude. Former colleagues who could no longer work were not dragged through an interminable process before someone actually agreed the validity of a perfectly obvious claim. My boss's attitude was very much 'pull yourself together and get on with it'. It completely misses the point, and as the administration rolls endlessly on, all that is happening is that they are avoiding their financial responsibilities at my personal expense." The woman, who was a teacher for more than 20 years before giving up work on the advice of her doctor, did not want to be named as her case is still under adjudication.

The TPA denied there were any new interpretations of the rules used to assess early retirement on medical grounds. But Martin Fisher, the principal officer for the NUT's northern region, said there was circumstantial evidence of harsher treatment. The TPA now used its own panel of doctors for medical adjudications in, for example, Darlington, rather than separate Department of Health doctors as before. He added that it appeared the TPA was actively reviewing cases of people being paid ill-health pensions. "The line is not so much we 'may' review your medical condition in the future [as previously] but that we 'will' do so every six or 12 months."

The Department for Education and Employment, of which the TPA is part, acknowledged that stress-related retirement claims had almost certainly increased, and therefore the number of rejections too. TPA assessors are having to come to terms with medical conditions that may not have been previously acceptable, said a spokesman. "For example, 10 years ago stress was unlikely to be written up on your medical records." But he added: "There are undoubtedly a number of people who are wrapped up in the idea of early retirement and it can become something of a personal crusade. In many cases there is plenty of work left in them but perhaps on a consultancy or freelance basis rather than back on the treadmill at school."

Unsurprisingly insurers and financial advisers claim the uncertainty on the treatment of claims underlines the need for private cover. Kevin Pearce, of Allied Dunbar, said: "This is a glowing example of why an element of personal insurance, called Permanent Health Insurance, is so vital, however many benefits you are promised by your employer. People who fear not being able to work through ill-health should ask themselves: Will I get an early retirement pension? When? And how much? What about state benefits? An insurance company will pay out for income replacement for as long as the individual cannot work. A condition such as stress qualifies under that definition, while the public pension provider has to be satisfied that the condition is truly irreversible before making a commitment. The message is clear, and we may not like it, but a personal financial lifeboat is more important now than it has ever been."

The Chancellor boosted these Permanent Health Insurance (PHI) policies in the Budget by making the benefit tax-free for as long as the claim lasted rather than the first 12 months. But there are catches: the policies do not pay any benefit for the first few months, sometimes up to a year, when someone is unable to work, and then they may only pay out, particularly after a certain period, if you cannot work at all, rather than simply work in your previous job. In addition, last year it was reported that some insurers were increasing premiums because of fears of more claims from teachers with stress-related illnesses.