Drive on
In November 2010 Mike injured his back while driving for Timmy’s Transport. The pain got worse and in December 2010 Mike finished work for Timmy’s Transport and received ACC payments due to his back injury. In May 2012, ACC arranged a vocational medical assessment which found that Mike was not fit to work as a driver anymore. Mike had been a member of Timmy’s Transport’s Superannuation Scheme (“the super scheme”) since he started working with Timmy’s Transport as a driver 8 years ago. Mike retired and the super scheme paid Mike his retirement benefit. As driving was all Mike knew how to do, in August 2012 he applied for a total and permanent disability benefit (“TPD benefit”) under the super scheme.
The super scheme’s trustees gave Mike’s claim to TTSS’s insurer, Safe N’ Sound Insurances (“Safe N’ Sound”). Safe N’ Sound reviewed Mike’s claim but declined it finding Mike was not ‘totally and permanently disabled’ as defined in the super scheme’s trust deed. The trustees agreed and Mike’s claim was formally declined in January 2013.
Mike asked for a review and gave the trustees more medical information in September 2013. The trustees and Safe N’ Sound re-considered Mike’s claim but again declined it in November 2013 as there was not enough medical evidence to prove Mike was totally and permanently disabled.
Exasperated, Mike went to see his doctor. Mike’s doctor completed a report addressing the trustees’ and Safe N’ Sound’s concerns and certified that Mike had no more medical interventions available to treat his back pain and that he would not be able to work as a driver again.
On receipt of this report, both Safe N’ Sound and the trustees reconsidered Mike’s claim and Mike was paid a TPD benefit of $227,976. in February 2014.
The Complaint
Mike had received a statement from the super scheme in 2011 that estimated a TPD benefit at more than $227,976 and Mike felt he should have been paid this amount. Mike also felt the super scheme should pay interest on the TPD benefit for the delay in paying out as he felt his condition had not changed since his injury happened in November 2010.
The super scheme’s trustees’ position
The trustees said they paid out Mike’s TPD benefit and explained the statement estimate Mike relied on had added Mike’s retirement benefit to the TPD benefit, accounting for the higher amount. The trustees felt they had acted appropriately throughout Mike’s claim in being willing to accept and consider new information and in making their decisions independently and in a timely manner. The trustees felt they had acted appropriately in declining Mike’s claim until they had sufficient medical information to uphold it.
FSCL’s involvement
We found:
- Mike was not entitled to any further payment as he had received his full entitlement on retirement and in the TPD benefit in accordance with the super scheme’s trust deed.
- In declining Mike’s claim until sufficient medical evidence was available to support it, the super scheme’s trustees had acted prudently and reasonably.
- The super scheme’s trustees had acted in good faith allowing Mike to submit further medical information and reviewing their decision as new information came to hand.
- Interest was not provided for in the trust deed and in the circumstances we did not believe that it was justified.
Outcome
Mike accepted our findings and we discontinued our investigation.
Lesson
Superannuation schemes’ trustees must apply the appropriate test based on the relevant trust deed definitions. Total and permanent disability claims will be determined on medical evidence. The threshold for approving TPD benefit claims is high, as the claimant must usually prove they will never again be able to work in the exclusive area for which they are qualified.
Interest or back payments to the date of injury in total and permanent disability cases are rare as the onus is on the applicant to provide the medical information and prove they are totally and permanently disabled to the satisfaction of the trustees and insurers. This may take several reports over a period of months or years in some cases.
