Clause 1 - Pension and compensation schemes: armed and reserve forces
Armed Forces(Pensions and Compensation) Bill
2:30 pm
Mr Bill O'Brien (Normanton, Labour)
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—
'(1) No time limit shall apply for the submission of claims for compensation, but after seven years of leaving the Armed Forces a claimant will only succeed if he/she can prove beyond reasonable doubt that the condition or disability for which he/she is claiming is due to service in the Armed Forces.
(2) Prior to the seven years limit it will be for the Secretary of State for Defence to prove beyond reasonable doubt that the condition or disability is not due to service in the Armed Forces.'.
New schedule 4—Armed Forces Compensation Scheme Eligibility/Time Limits—
Introduction
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.
Eligibility
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.
Negligence
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.
Eligibility Criteria
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.
Time Limits
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
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
Introduction
(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.
Interim Awards
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.
Deterioration
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.
Consequential Disorders
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
in the Scheme will settle completely or to a stable condition within a short time.
Lump Sum
General
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.
Multiple Disablements
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.
Aggravation
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)
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.
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.
Children's Benefits
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
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 Lump Sum GIS 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.