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Standing Committee B
Tuesday 10 February 2004
[Mr. Bill O'Brien in the Chair]
Pension and compensation schemes:
armed and reserve forces
Amendment proposed [this day]: No. 4, in
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are discussing the following:
New clause 16—Report to parliament—
'The Secretary of State shall report to Parliament on the operation of any tariff-based compensation schemes not later than five years after the introduction of such a scheme or three years after any amendment to such a scheme.'.
New clause 23—Time limits—
New schedule 4—Armed Forces Compensation Scheme Eligibility/Time Limits—
1 The Armed Forces Compensation Scheme (AFCS) is a no-fault compensation scheme which will cover death, illnesses or injuries attributable to or significantly aggravated by service where the illness first presented or incident occurred on or after the date of implementation of this scheme. The scheme will provide lump sum payments for pain and suffering based on a graduated system of tariffs and, where appropriate, income to compensate for loss of earnings capacity. For those disablements which arise before the new scheme comes into force or for deaths which are attributable to events predating this scheme, provision will remain under the current War Pension Scheme and Armed Forces Pension Scheme attributable arrangements.
2 The determination of claims will be evidence-based and decision will be taken using the modern ''balance of probabilities'' standard of proof, which will apply a double test to compensation cases to ensure that the burden of proof does not unfairly discriminate against service personnel. Under such a system, a claim for compensation would only fail where both: (a) the claimant is unable to prove on the balance of probabilities that a condition is due to service, and (b) the MoD is able to prove on the same standard of proof that the condition is not due to service. The Department is required to support any claim by releasing any relevant information, such as medical records to assist the claimant.
3 The AFCS will cover regular members of the Royal Navy, Royal Marines, Royal Air Force, Army and members of the Reserve Forces as defined in the Reserve Forces Act 1996.
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4 Any payment made under this scheme would not disqualify Service personnel from making civil negligence claims against the Department. However, any such compensation payment would be taken into account in settling any civil negligence claim, on the basis that loss, for example of earnings, should not be compensated for twice. Abatement of awards would be made where appropriate.
5 The eligibility criteria are intended to provide compensation for disablement or death due to:
(1) Incidents which were the direct consequence of a person's duties in the Armed Forces, on from following a legitimate order;
(2) Terrorism and warlike activities;
(3) Negligence by the MoD as an employer.
6 The scheme is not designed to provide compensation for every illness or injury experienced by a member of the Armed Forces during his or her career. It will not cover:
(1) Illness which could not be demonstrated on the balance of probabilities to be the result of an individual's duties in the Armed Forces;
(2) Injuries arising from incidents not directly related to duties in the Armed Forces;
(3) Injury or illness arising from culpable negligence or misconduct on the part of the individual.
7 Personnel or their dependants can claim compensation for death, injury or disease in the following situations:
(1) Attributable death in service;
(2) Attributable injury or illness in service leading to medical discharge;
(3) Attributable injury or illness in service not leading to medical discharge;
(4) Attributable conditions or death developing after leaving Service but claimed before five years (if not linked to a specific incident);
(5) Attributable conditions or death which are recognised to have a late onset (such as some cancers) with no time limit;
(6) Conditions having onset before or during Service which are subsequently significantly aggravated by Service.
8 The circumstances giving rise to admissible claims fall into six broad categories:
(1) injury or illness arising in service and causing immediate disablement;
(2) injury or illness arising before or in service and significantly aggravated by service;
(3) death in service;
(4) injury or illness in service claimed to be the cause of disablement arising in the longer term;
(5) illness which arises after retirement;
(6) death in retirement.
9 For each category, we have considered eligibility to claim and the period of time within which a claim must be submitted. In the first three categories there is no doubt that individuals, or their survivors, should be eligible for benefits. The position is more difficult for the other three categories, where the objective should be to permit claims for conditions clearly attributable to service but to exclude claims where a causal link is unlikely.
10 The qualifying period for claiming for disablement/death for the majority of conditions is as follows:
(1) Five-year time limit to claim from the specific incident that caused the injury, or from first medical presentation of the illness;
(2) Within five years of service termination where there is no specific incident, but the disorder is due to ongoing repeated activities.
11 In addition, there should be a time limit of one year after medical diagnosis has been confirmed. This practice is common in
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insurance-related schemes and social security benefits. An open-ended system would have the disadvantage that where claims were submitted very late, it could be very difficult properly to assess evidence. There will, however, be safeguards to protect the position of a person who was genuinely unable to claim within the year on account of his condition and unable to instruct another person or organisation to act on his or her behalf, or perhaps in some circumstances because his condition had not stabilised.
Claiming Outside the Time Limit
12 While for the majority of conditions it is reasonable to impose a time limit to claim, there are some conditions which medical opinion accepts can have a possible service causal link but, by nature, present clinically only after years or decades. Claims for listed exempt conditions, such as some cancers linked to occupational exposures, asbestos related diseases and some psychiatric illnesses, would be accepted outside the normal time limit.
13 The Secretary of State will publish an exceptions list of illnesses based on expert medical advice from the appropriate specialities. The list will retain a degree of flexibility. It will be reviewed annually to take account of medical understanding and additional conditions may be added (and others removed) on the basis of new medical evidence and understanding of causation of the disorder. Eligibility for claims for illnesses subsequently added to the list will include those whose illness relates to service prior to the date of the changes to the exemptions list.
Deterioration/Interim Awards and Consequential Disorders
(1) Assessment of disablement and quantification of awards is not a matter of consensus or exact science. While treatment for the disabilities seen in 1917 at the outset of the War Pensions Scheme was limited, with strong risk of increase in disabling effects with time from the injury, modern medical management means that most disabling disorders (particularly the less serious injuries) will now improve quickly to cure or steady state. For the majority of successful claimants, in line with civil awards and the insurance industry, the initial award will be full and final and there will be no routine review mechanism. This also means that once an award is made, if the Service person's (or ex-Service person's) condition improves any Guaranteed Income Stream (GIS) in payment will not be withdrawn or reduced. Awards in the compensation scheme are for service-related disablement only and do not reflect age-related disablement.
14 There are some situations where, from the outset, it is not possible to predict with confidence the long-term prognosis for an individual. In such cases, an interim award will be made with an agreed interval before a review to assess the condition and either the original award will be confirmed or revised.
15 The tariff levels are designed to take account of expected average degree of deterioration for any given condition based on generally accepted medical understanding. To cater for exceptional circumstances, where deterioration is significantly greater than would be either expected or accounted for in the tariff level, the arrangements will offer re-opening of cases. Evidence of significant material change in the person's condition will be required.
16 The tariff levels take account of the average prognosis of the core disorder including, in the case of some serious traumatic physical injuries, the high likelihood of subsequent osteoarthritis in relevant joints. The provisions of the new scheme consider such disablement as an extension of the original injury.
17 Review of the case will be permitted where from the outset the nature of the accepted disablement means that there is a recognised risk that some consequential disorder could develop at some indefinite time in the future, eg head injury followed by traumatic epilepsy. In contradistinction to 2.4 the risk here is possible, not probable. This approach will not be applicable to the majority of disorders claimed in the Scheme. The majority of claims
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in the Scheme will settle completely or to a stable condition within a short time.
18 The Scheme awards lump sum payments as compensation for pain and suffering according to a comprehensive graduated tariff. This delivers consistent awards for the same disability. This lists injuries, mental and physical conditions (in line with their nature and severity) and corresponding monetary award levels.
19 The published award levels are informed by medical understanding and the approach of the Judicial Studies Board. Definitions used in the tariff descriptors, adjudication guidance and supporting policy are being developed and will be published. Following scheme implementation, the tariff levels will be reviewed in line with emerging medical knowledge and changed approaches by the Judicial Studies Board.
20 Lump sum awards are payable for those able to remain in Service despite an attributable injury. It is likely that such awards will be below tariff level 11 where no GIS is payable. However, while the Service person remains in the Armed Forces, regardless of the type of injury and relevant tariff level, there would normally be no GIS as no compensation for loss of earnings would be required. For further details on GIS see Section 4 below.
21 The scheme will consider multiple disablements arising from the same incident. While the exact details have not yet been finalised, it is likely that up to three conditions might be covered and that the total value of lump sum payment would not exceed tariff level 1.
22 The Scheme will make awards on the basis of significant service aggravation of disorders. Disorders will have had origin pre or during service and must have been aggravated significantly by service with aggravation remaining at service termination. If the disorder is no worse than before service or than it would have been had a person not served, service aggravation does not remain and there is no entitlement. The above will apply for determining GIS awards. The position for lump sum awards where service has aggravated rather than caused the condition is the subject of further detailed work.
23 If a condition is aggravated, the award paid will be the percentage of the tariff award (to the nearest centile) which represents Service aggravation.
Guaranteed Income Stream (GIS)
24 For those attributable injuries or illnesses that are in tariff levels 1 to 11 a Guaranteed Income Stream (GIS) is payable for life as compensation for loss of earnings. The formula used to calculate the GIS is at Annex B.
25 The GIS formula is based on the salary in payment at the time of retirement and the remaining years left until the normal pension age (which for the Armed Forces is age 55), plus the period of time for which on average a pension is drawn in retirement. The calculation produces an annual income that is paid for life. The percentage of lost earnings included in the compensation income depends on the severity of disability, as expressed by the tariff.
26 The percentages are:
(1) Tariffs 1–4: 100 per cent.
(2) Tariffs 5, 6: 75 per cent.
(3) Tariffs 7, 8: 50 per cent.
(4) Tariffs 9–11: 30 per cent.
(5) Tariffs 12–15: None
Once the GIS has been calculated, the income is abated by any AFPS invaliding pension in payment to ensure that the Service person is not compensated twice.
27 Where there are multiple injuries, a maximum of 100 per cent. GIS will be paid, but will apply only to conditions where there is a significant multiplier effect on earnings capacity.
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WGIS (Widow(er)s' Guaranteed Income Stream)
28 For the first time widows/widowers and substantial registered partners are to be treated equally for compensation purposes. The compensatory income would be derived by calculating the size of the capital sum required to compensate the widow/widower for the financial penalty of the loss of the spouse's earnings. This sum will then be structured to provide a regular income in the form of a Guaranteed Income Stream for Widow(er)s (GISW).The GISW would be payable for life, and would equate to 60 per cent. of the GIS calculation minus 75 per cent. of any non-attributable pension benefits that have been awarded. It would be inappropriate to provide compensation equal to or more than the full value of the spouse's lost earnings because this would clearly exceed a widow(er)'s actual financial loss. It is not possible to assess the true extent of financial loss for widow(er)s, and there is no single formula that will match all circumstances, but we consider that 60 per cent. of the spouse's lost earnings capacity (abated by the widow(er)'s ill-health pension to avoid double counting), should represent a reasonable solution.
29 No major changes are proposed to the value of benefits payable to children of those whose death was attributable to service, but the structure will be adjusted to reflect the GIS approach. The benefits are not intended to provide financial support for life, but only until the age when children would normally cease to be financially dependent on their parents. A child's GIS may cease when the child reaches 17. However, it may continue, or be restored, whilst the child is in full-time education. It may also continue, or be restored, whilst the child is in full-time education. It may also
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continue if it is determined that the child is incapable of earning his or her own living due to mental or bodily infirmity and where the condition was diagnosed before the child reached the age of 17. Decisions will be at the discretion of the scheme administrator. Children's benefits will be awarded as follows:
(1) Where there is a widow(er):
(a) 12.5 per cent. of the sum for the lost earnings capacity of the deceased (abated by the illhealth pension to avoid double counting) will be made available for each of the first two children, and 7.5 per cent. for each of the next two. If there are more than four children, 40 per cent. of lost earnings will be divided equally.
(b) Subject to the provision of abatement above, an only child will also receive 25 per cent. of the ill-health pension. If there are two or more children, 37.5 per cent. of the ill-health pension will be divided equally.
(2) Where there is no widow(er):
(a) 25 per cent. of the sum for the lost earnings capacity of the deceased (abated by the ill-health pension to avoid double counting) will be made available to each child, up to a maximum of four children. If there are more than four children, 100 per cent. of lost earnings will be divided equally.
(b) Subject to the provision on abatement above, an only child will receive 33.33 per cent. of the ill-health pension, two surviving children will share 66.67 per cent. of the ill-health pension, and if there are three or more children, the full ill-health pension will be divided equally.
Benefits Payable on Attributable Injury or Illness
|Armed Forces Non-Attributable Ill-Health Benefits|
|Attributable Compensation Scheme Benefits|
|Benefits payable if member of new AFPS|
|Benefits payable if member of current AFPS|
|Remaining in Service||None||None||Lump sum payable for pain and suffering (see section 3)||No GIS appropriate as there is no loss of earnings (see section 4)|
|Medically discharged||Ill-health award dependent on severity of condition based on three tiers|
|Service Non-Attributable Invaliding Pension|
|Lump sum payable for pain and suffering (see section 3)|
|For injuries at tariff levels 1-11 a GIS will be payable to compensate for loss of earnings (see section 4) but abated by benefits payable under the AFPS and Early Departure Scheme.|
Benefits Payable on Death
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|AFPS Non-Attributable Benefits|
|Compensation Scheme Benefits|
|Benefits payable if member of new AFPS|
|Benefits payable if member of current AFPS|
|Attributable death in Service||Non-attributable Widow's Pension based on 2/3 of member's highest tier ill-health pension|
Death-in-service lump sum of four times pensionable pay
Benefits payalbe to substantial registered unmarried partners
|Non-attributable Widow's Pension based on 1/2 of member's ill-health pension|
Death-in-service lump sum of approx. 1 1/2 times pensionable pay
|Bereavement Grant guarantee for widow(er)s or registered unmarried partners: currently set so that if 3 times pensionable pay plus £20,000 is greater than the AFPS death-in-service lump sum, the compensation scheme will pay the balance|
Benefits payable to registered unmarried partners
|Attributable death in retirement|
|Non-attributable Widow's Pension based on 2/3 of the member's pension in receipt at the date of death|
5 year pension guarantee
Benefits payable to registered unmarried partners
|Non-attributable Widow's Pension based on 1/2 of member's pension in receipt at the date of death|
|Bereavement Grant, currently set at £20,000 to widow(er)'s or registered unmarried partners|
Benefits payable to registered unmarried partners
Home to Duty and Physical Development
Home to Duty
32 Compensation will be provided for limited home-to-duty travel to cover emergency callout (to duty only), travel to/from operations/exercises overseas (in accordance with Joint Service Publications guidelines) and other detached duty travel.
33 Exceptionally, if Service Families Accommodation (SFA) is unavailable within 50 miles radius of the workplace then compensation will be provided in the event of an injury or death whilst travelling between home and work. Individuals who choose to live more than 50 miles from work in SFA will not be covered under the scheme.
Physical Development Activities
34 Compensation will be provided for injury arising from all publicly funded fitness, sports and adventurous training activities that would qualify as ''on duty'' as laid down in Service Regulations.
35 Defined fitness activities (regulations as laid down in the Armed Forces Physical Development Policy document) are also eligible for compensation in the event of injury. These must be part of a formal training or fitness programme agreed by the Service authority as necessary to meet Service fitness requirements.
36 Injuries incurred in the above activities will generally be admissible for compensation only if they are reported, recorded and subject to medical examination when incurred. This should generally take place within 24 hours of the event. However, the scheme will have discretion to accept attributability where under the specific circumstances the reporting timescale is not practicable or where the injury cannot be attributed to a single incident. This will be subject to the existence of reasonable evidence, including within service medical records, to support the case for attributability.
37 Injuries incurred during or in support of sporting commitments undertaken in a professional capacity or for a national team will not qualify for compensation under the new scheme. It is considered reasonable that these will be covered by separate provisions.
38 Travel to sports competitions and other activities as classed as ''on-duty'' within the Service regulations will be covered under the Compensation Scheme provided that this travel is publicly funded.
39 Injuries incurred in leisure or social activities will not be eligible for compensation under the new arrangements. It will be for individuals themselves to consider whether they need to make arrangements for appropriate cover for such activities.
40 All members of the Reserves as defined under the 1996 Reserves Forces Act will be covered under the AFCS. This replaces the benefits they currently receive under the Attributable Benefits for Reservists Scheme (ABRS). As with the current ABRS, this scheme is designed to give Reservists the same attributable benefits as regular Service personnel. However, where a Reservist is in receipt of benefits from elsewhere, such as a personal pension or an occupational pension, benefits under the new Compensation Scheme would be abated.
41 This will be the same as for regular Armed Forces personnel. Eligibility for compensation for disorders that develop after service termination will be subject to a time limit of five years, apart from certain listed late-onset conditions, such as some cancers.
Guaranteed Income Stream
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earning civilian occupation will not be disadvantaged, full account will be taken of pay supplements that some Reservists earn (to compensate for those whose gross civilian earnings are higher than their gross service pay).
Physical Development Activities
Internal Appeals Process
45 Precise details of the appeal procedures are not yet finalised. However, a claimant will have the opportunity to challenge decisions taken by the scheme administrators. This will start with a single or twin stage Internal Dispute Resolution Process (IDRP) which will be followed by the right of appeal to the Pensions Appeal Tribunal (PAT), and at second stage to the Social Security Commissioners. Both are ECHR compliant, independent appeals bodies.
46 Claimants will be notified of decisions in the Scheme and provided with reasons for decisions. The points on which a claimant can challenge decisions include:
(1) decision to award/not to award;
(2) level of award;
(3) decision not to waive time limits;
(4) decisions on application of exceptional review on grounds of deterioration.
47 Individuals will have a period of, say [90 days] following the date of the initial decision notification, when they can dispute the decision and apply for review. They will need to provide grounds and present such additional information as they judge appropriate to support their case. There will be some discretion to waive the time limit for internal review where there is good cause, such as claimant being overseas, illness etc.
Independent Appeals Process
48 If the grounds for the appeal are accepted as legitimate, the case will be reviewed and again the outcome notified with reasons. The claimant can then further challenge the review decision within a defined period [30 days], to the independent appeals authority, the Pensions Appeal Tribunal (PAT).
Pensions Appeal Tribunal
49 The PAT is the existing point of appeal from decisions of the current scheme. It is intended the PAT will concurrently hear appeals under both the old and new schemes, until claims under the old scheme have phased out over time.
50 The PAT rehears cases in full, considering issues of fact and law. The Tribunal is headed by a legally qualified President, supported by a panel of part-time Legal Chairmen, Medical Members and Service Members.
Further Appeals: Social Security Commissioners and Court of Appeal/Court of Session
51 Under the new scheme decisions of the PAT may be appealed on a point of law to the Social Security Commissioners. This is a change to the present situation, where the High Court is currently the first point of appeal from PAT. Changing the path of appeal will bring the appeal route into line with modern tribunals policy and provide better customer service for appellants.
52 The Commissioners currently hear appeals from a wide range of tribunals. They are experienced judges, well qualified to judge on difficult points of law, and provide a low-cost, user-friendly forum that is far more accessible than the High Court.
53 It is intended Commissioners with appropriate experience in armed force pension matters be assigned to these appeals. It is also intended they be named ''Pensions Appeal Commissioners'' during the hearing, to signify the special status given to veterans' issues.
54 Decisions of the Social Security Commissioners may in turn be appealed to the Court of Appeal (or the Court of Session in Scotland) on a point of law. In some cases it may be appropriate for particularly difficult points of law to have final resolution in a Court.
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Administration of the Scheme
55 Administrative arrangements are not yet developed in detail, however some key points have been established as follows:
(1) A claim will be considered automatically where there is a medical discharge from service or a death in service.
(2) Decisions in the scheme will be evidence-based, dependent on case-specific facts, the standard of proof and in line with contemporary medical understanding of causes of the disorders.
(3) Guidance and instructions for decison-makers, and policy underpinning the Scheme will be published and regularly reviewed.
(4) There will be a statutory internal dispute resolution procedure followed by a right of appeal to the PAT which provides an independent ECHR-compliant appeals procedure.
56 The details will be developed by a working group, with tri-Service representation and input from agencies such as the Veterans' Agency and the Armed Forces Pay and Administration Agency. Interested veterans organisations will also be consulted.
57 The administrative process will be subject to the usual government financial controls and arrangements will need to ensure the integrity of the scheme and make it fraud resistant. Comprehensive management information will be required and the administrators and medical advisers will be provided with adequate training, published guidance and supervision. Suitable quality assurance processes will be included. The details of these processes are still to be developed.
Adjudication of Claims and the Role of the Doctor
58 Decisions will not be medically certified but made by administrators with access to medical advice. Designed on the tariff system and with the time limits for claiming, it has been the aim to make the new scheme's decisions relatively simple and to reduce to a minimum the scope for discretion.
59 To ensure high quality decsions medical input is needed in the new scheme. Three main areas are as follows:
(1) scheme design (including review and updating of tariff and exceptions list);
(2) provision of medical evidence;
(3) provision of medical advice to the decision-maker where required.
60 Service medical evidence is key to the new arrangements and emphasis will be on the importance of detailed, accurate service records fully documenting incidents, events and health information. This will be supported by the work done since the 1991 Gulf crisis to improve the medical records of Service personnel including the introduction of the Operation Medical Record (FMed 965). In the longer term it is proposed to link electronic and paper records for both peace-time and operations. The system will be compatible with NHS systems and in line with the Government information strategy on electronic medical records. The Compensation Scheme will be introduced at a time when there have been significant improvements in the management of medical records. The resultant Service medical records will allow administrative staff broadly to establish the presence and nature of disablement and eligibility. Analysis of in service data and war pensions claims confirms that the majority of claims will be for musculoskeletal injuries and conditions which are well suited to a tariff approach.
61 More complex claims will benefit from easily accessible medical advice for administrative decision-makers. Particular issues may be:
(1) Where the claimed disablement does not quite fit the tariff;
(2) There is no clearly appropriate tariff level;
(3) Whether cases falling outside the 5 year time limit for submitting claims should be accepted for consideration on the basis that they should fall within the ''excepted'' list;
(4) Medical disorders where there is no consensus understanding, eg psychological injury.
62 Where necessary and, as now, with permission, post-service evidence from the claimant's clinicians or by examination will be obtained. Advice to adjudicators will be provided by trained dedicated doctors who have knowledge of the Scheme, law and
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policy as well as a background in disability analysis or occupational health.
63 The War Pensioners Welfare Service (WPWS) will remain for those who are already in receipt of a War Pension. With a different client base and setting, we will consider the particular nature of the support required for the new compensation scheme, avoiding duplication of existing related services. Support around service termination will be paramount. Long term follow-up is likely to be appropriate only for the most seriously disabled. The Veterans Agency will play an important role in advising on the development of proposals for a support mechanism and we will consult as appropriate with ex-Service organisations.
Provision of Medical Treatment for Disablement Leading to Medical Discharge
64 As with the present provisions, the assumption is that in-service care will be provided by the Defence Medical Service, while post-service responsibility for service-related disablements will fall to the NHS. We will be consulting with the Department of Health about the continuance of current arrangements for priority NHS medical treatment for compensated conditions.
65 Although claims for injuries through the new Compensation Scheme will be made for injuries and illnesses whose cause occurs after the date of implementation, we recognise there may be less clear cut cases and will be developing mechanisms to ensure that no claims will fall between the gaps of the new and old schemes.'.