Ill-health retirement for active members
A member may be able to take immediate payment of their benefits, no matter their age (as long as they are below normal pension age), if they are dismissed because of ill-health. To get an ill-health pension the member must have been in the scheme for two years and the employer decides (after receiving an opinion from an Independent Registered Medical Practitioner) that:
- The member is, because of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment they were engaged in, and;
- The member, because of ill-health or infirmity of mind or body, is not immediately capable of undertaking any gainful employment.
If the member has reached, or is over normal pension age, the ill health retirement process isn't needed as the member can already take their benefits unreduced.
Getting the opinion of an independent registered medical practitioner (IRMP)
Before deciding whether to award an ill-health retirement, you must get the opinion of an IRMP. The IRMP must be registered with the General Medical Council and have a qualification in occupational health.
The IRMP can't previously have been involved in the case for which the certificate is being requested.
The IRMP will base their opinion on the medical information given to them by the member’s treating professional. The member will give this information to you, to make sure you get as information much as possible.
You'll need to send the IRMP a certificate to complete. You should also ask the IRMP for a narrative report. This should explain how and why they have reached their opinion. This will help when you make your decision.
Please contact us for the most recent list of the approved IRMPs. If you use either Shropshire Council or Telford & Wrekin Council for your occupational health services, contact them to ask for a copy of this list.
Preparing a referral to an IRMP
When preparing the referral to the IRMP you should make sure you:
- Have met with the member to explain the ill-health process and passed on the member guide
- Have collected all relevant medical information and had consent to pass it on
- Are clear about the duties of the job in the referral information i.e. the member may be expected to lift heavy items, but their back problem is stopping them from doing so
- Should explain any adjustments made to help the member manage their ill-health
- Should consider whether there are any other questions you would like a medical opinion on?
- Should make sure a certificate is provided
If you use either Shropshire Council or Telford & Wrekin Council for your occupational health services, please make sure they've had clear instructions. You should also make sure they are aware if the member is active or deferred.
Making the final decision
You're responsible for deciding if the member should be terminated on the grounds of ill-health. You also must decide which tier of benefits should be awarded. You should consider the opinion of the IRMP, but you must make your own decision. It's important you're able to give reasons for your decision.
Tiers that can be awarded
There are three tiers of benefits you can award to a member.
Please note, under the 2014 regulations ‘gainful employment’ means paid employment for no less than 30 hours a week, for no less than twelve months.
Tier 1 –
You should award tier 1 benefits if the member is unlikely to be capable of undertaking gainful employment before reaching their normal pension age.
The member’s service will be enhanced to their normal pension age.
Tier 2 –
You should award tier 2 benefits if the member is unlikely to be capable of undertaking any gainful employment within three years of leaving the employment, but, it's likely they'll be able to do so before reaching their normal pension age.
The member’s service will be enhanced by 25% of their membership to their normal pension age.
Tier 3 –
You should award tier 3 benefits if the member is likely to be capable of undertaking gainful employment within three years of leaving the employment, or before their normal pension age, if earlier.
The member will get the benefits they've built up, up to the date of termination. There will be no enhancement on the benefits.
The benefits will be due for a maximum of three years, or until the member is in gainful employment. There will be a review after 18 months where you should write to the member to see what their employment status is.
If you decide that gainful employment has been found, payments should stop. If gainful employment hasn't been found, a re-assessment from the IRMP is needed. You must then decide whether to carry on the tier 3 payments for the rest of the three years, or you may decide that a tier 2 benefit should be awarded.
Please tell us the outcome of the 18-month review. Also, if you're told about the member finding gainful employment before the 18-month review, we need to know so we can stop payment and defer the benefits.
The notice letter
You must let the member know if you're awarding benefits or not. In either case, you should tell the member:
- Of your decision
- How you reached the decision
- How the employee meets or doesn't meet the rules under the regulations
- How you have referred to the IRMP's opinion
- Information on how the member can appeal the decision, including the timescales and contact information
If benefits are being awarded, you should also tell the member:
- The tier of ill-health benefit being awarded
- If tier 3 benefits have been awarded, that there will be a review at 18 months
You can find more information in the ill-health frequently asked questions.
Transitional protection from the 1997 scheme
A member may have protections if they're awarded tier 1 or 2 benefits and:
- They were in the LGPS and had reached age 45 before 1 April 2008
- They're later awarded an ill-health retirement
- They're entitled to the membership enhancement that would've been given under the 1997 regulations if the pension benefits were greater than those granted under the 2014 regulations
The enhancement would still be treated as post-2008 scheme membership, so they will get 1/60ths pension and no automatic lump sum.
What do we need to process an ill-health retirement?
So we can process an ill-health retirement, please send us the following:
- A completed PEN007B leavers form
- Copy of the IRMP's certificate
- Copy of the notice letter
- P45 (if available) – this should be sent for income tax deductions from the pension to be assessed
