Duncan Campbell v NHS Business Services Authority

Under the National Health Service Pension Scheme Regulations 1995/300, “retires from pensionable employment” means retirement from pensionable employment as a whole, not merely cessation of work. Regulation C2(5)(a) is a deeming provision. Where payment is made for untaken leave when a member leaves pensionable employment or dies, that employment continues notionally for the corresponding period. The deeming provision applies to ill-health retirement unless the Regulations expressly limit it. A member therefore cannot acquire ill-health retirement benefits during the deemed continuation period. The scheme generally separates receipt of benefits from contribution-paying pensionable employment, subject to limited exceptions under regulation S1. Harsh consequences in an individual case do not justify departing from clear regulatory language.

Mrs Denise Campbell was an NHS employee and member of the 1995 Scheme. She applied for commuted Tier 2 ill-health retirement benefits, but died before Form AW8 was completed. Payment was made for untaken annual leave, extending the period for which her pensionable employment was treated as continuing.

The Pensions Ombudsman dismissed the complaint, holding that Mrs Campbell died in service. The High Court dismissed the appeal: [2023] EWHC 928 (Ch). The appeal concerned the construction of regulations E2A and C2(5). A second issue concerning regulation T1 and Form AW8 arose only if the first issue succeeded.

1. Appeal dismissed. Lady Justice Asplin gave the reasons, with Sir Launcelot Henderson and Lord Justice Lewison agreeing.

2. The phrase “retires from pensionable employment” in regulation E2A must be read as a whole and in the context of the National Health Service Pension Scheme Regulations 1995/300. It does not refer merely to retirement or cessation of work. The relevant question is whether the member has retired from pensionable employment. The ordinary meaning of “retires” cannot be divorced from the words that follow it.

3. The discussion of R (PACCAR Inc & Ors) v Competition Appeal Tribunal & Ors [2023] UKSC 28, [2023] 1 WLR 2594 did not assist the appellant. That case concerned the potency of a term used in a statutory definition. Here, “retires” and “retirement” were not defined terms, and the phrase had to be construed within the structure of the pension scheme.

4. Regulation C2(5)(a) uses “treated as continuing” as a statutory deeming provision. It applies where, on leaving pensionable employment or dying, payment is made for untaken leave. Pensionable employment is treated as continuing for the corresponding period. The payment is treated as pensionable pay under regulation C2(5)(b), with the related contribution structure continuing. Fowler v Revenue and Customs Commissioners [2020] 1 WLR 2227 supported treating the provision as a statutory fiction and applying its natural consequences. Nothing in the Regulations excluded its application to ill-health retirement.

5. The scheme’s structure reinforced that interpretation. Pensionable employment involved contributions, and pensionable service counted both towards entitlement and calculation. There was therefore a natural dichotomy between contribution-paying employment and receipt of benefits, subject to the limited circumstances addressed by regulation S1. The potentially harsh result did not make the clear construction anomalous or unjust.

6. Because Mrs Campbell’s pensionable employment was treated as continuing until 20 June 2018, she died while still in pensionable employment and had not retired for the purposes of regulation E2A. She had no entitlement under that regulation. The regulation T1/Form AW8 issue did not arise and was not decided. The existing order limiting the appellant’s costs exposure to £25,000 under rule 52.19 was not varied.

• Court of Appeal (Civil Division): Appeal dismissed on 16 November 2023: [2023] EWCA Civ 1351.
• High Court (Chancery Division): Zacaroli J dismissed the appeal from the Pensions Ombudsman’s determination on 4 May 2023: [2023] EWHC 928 (Ch).
• Pensions Ombudsman: Determination dated 29 April 2022, numbered CAS-43833-N8K7, dismissing the complaint. The related complaint against the Trust was compromised before the High Court.