This recent decision of the Court of Appeal considers the meaning of “pensionable employment” for the purpose of ill health early retirement provisions within the NHS Pension Scheme regulations, and whether a period of notice counts as pensionable employment for that purpose.


Mrs Campbell, a member of the 1995 NHS Pension Scheme, applied to commute her benefits and take them as a lump sum on the grounds of limited life expectancy due to ill health. 

The timeline of key events is as follows:

26 May 2018: Mrs Campbell submitted an application to commute her ill health retirement benefits and take them as a lump sum, due to her limited life expectancy;

30 May 2018: Form AW33E (consideration of entitlement to ill health retirement benefits) was submitted on her behalf;

31 May 2018: A letter was sent terminating her employment with immediate effect, on grounds of capability due to ill-health. The Authority agreed to provide Mrs Campbell with lump sum payments in her June payslip (at the end of June), in respect of her 12 weeks’ notice and outstanding annual leave; 

3 June 2018: Mrs Campbell’s employer was informed that her application to the Scheme for ill-health benefits was approved and that Form AW8 should be forwarded and completed as soon as possible; 

6 June 2018: Mrs Campbell died (before Form AW8 had been completed). 

The complaint

Following Mrs Campbell’s death, the Authority refused to authorise the payment of commuted ill-health benefits, on the basis that, taking into account her outstanding annual leave, Mrs Campbell’s last day of employment was 20 June 2018 – meaning that she had died in pensionable service, rather than in retirement. 

This conclusion had a significant impact on the benefits payable in respect of Mrs Campbell, as this table demonstrates:


Lump sum

Initial survivor pension (first 6 months)

Survivor pension thereafter

Death in service benefits


£5,936.91 per month

£14,660.92 per annum

Benefits payable where commuted on basis of ill heath


£2,443.48 per month

£14,660.92 per annum








Mr Campbell appealed the decision of the Authority, arguing that his wife had stopped working at the NHS at the date of her death and was therefore entitled to the lump sum payment of commuted ill-health benefits, and associated survivor pension (payable on death in retirement).

Both the Pensions Ombudsman and the High Court dismissed Mr Campbell’s case.  Mr Campbell then appealed to the Court of Appeal.

The Court of Appeal decision

The Court of Appeal upheld the conclusions of the Pensions Ombudsman and the High Court and dismissed the complaint.

The key question for the court to consider was whether Mrs Campbell’s pensionable employment was to be treated for the purposes of Regulation E2A as having continued until the expiry of the period of her untaken leave.

Two provisions of the National Health Service Pension Scheme Regulations 1995 (the “1995 Regulations”) were key:

  • Regulation E2A (Ill health pension on early retirement) requires that the member retires from “pensionable employment”, defined in the 1995 Regulations as meaning “NHS employment in respect of which the member contributes to the scheme in accordance with this Section”. Significant weight was given to this definition by the Court of Appeal, and it was noted that the definition of “pensionable employment” dovetails with the definition of “pensionable service” in Regulation C2(1);
  • Regulation C2(5) provides that where a member “leaves pensionable employment or dies” pensionable employment is “treated” as continuing for the period of the leave for which payment is made and the payment will be treated as pensionable pay for that period.  The Court noted that the definition of “pensionable pay” in Regulation C1(1) includes “all salary, wages, fees and other regular payments made to a member in respect of pensionable employment . . .”. Regulation D1 makes clear that each member in pensionable employment must contribute to the 1995 Scheme.

In reaching the conclusion that Mrs Campbell had died in pensionable employment, rather than in retirement, the Court emphasised that Regulations E2A and C2(5) “must be interpreted in the context of the 1995 Regulations as a whole.”  Giving the leading judgment, Asplin LJ said:

It seems to us that the natural meaning of the words used in Regulation C2(5)(a) when read in context, is that pensionable employment is treated as 'continuing' until the end of the period of untaken leave for which payment is madeAs the judge pointed out, Regulation C2(5) does not merely increase 'pensionable pay' by the amount paid in lieu of untaken leave. It extends the period of pensionable employment by treating it as 'continuing'. It states that it does so not only where the member leaves pensionable employment but even where the member dies. There can be no doubt, therefore, that the extent of the fiction created is broad. Furthermore, there is no limitation on the wording which might indicate that it is not intended to apply in the circumstances of early retirement on grounds of ill health as much as in any other situation contemplated in the 1995 Scheme.”

Whilst the member’s employment had terminated with immediate effect on 31 May (due to the termination payments), her pension contributions were scheduled to continue until 20 June.  On this basis, Mrs Campbell’s pensionable employment had not ceased as of 6 June, and therefore, the court concluded, she had not died in retirement but as an active member of the scheme.


The facts of this case may be unusual but they are not unheard of.  By their very nature, serious ill health cases can move very quickly and members may die before all steps have been taken to implement a decision, or (as in this case) before expiry of a notice period in relation to an impending retirement.

Whilst the impact on the benefits payable in respect of Mrs Campbell as a result of the decision is significant, the 1995 Regulations are clear and the Court of Appeal upheld the prior decisions of the lower court and the Pensions Ombudsman unanimously.

This article was co-written by Callum Duckmanton