Ill-Health Retirement (Active Member)
These pages are for employer use only. Member information can be found on the home page.
An active member who has qualifying service for a period of two years and whose employment is terminated by an employer on the grounds of ill-health or infirmity of mind or body, before that member reaches Normal Pension Age, is entitled to, and must take, early payment of a retirement pension if that member satisfies the below conditions:
(1) The first condition is that the member is, as a result of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment the member was engaged in.
(2) The second condition is that the member, as a result of ill-health or infirmity of mind or body, is not immediately capable of undertaking any gainful employment.
The amount of retirement pension that a member who satisfies the conditions receives is determined by the employer therefore the decision to award benefits is made by the employer and not the Pensions Team.
A PDF is available for your employees to view on the website which you may want to share with any employees affected by ill-health. This can be found below under ‘more information’.
Benefit tiers which could be awarded
Tier 1 –If the member is unlikely to be capable of undertaking gainful employment before normal pension age.
Benefits paid to the member – The member’s service is enhanced up to Normal Pension Age.
Tier 2 –If the member is not entitled to Tier 1 benefits and is unlikely to be capable of undertaking any gainful employment within three years of leaving the employment, but is likely to be able to undertake gainful employment before reaching normal pension age.
Benefits paid to the member – The member’s service is enhanced by 25% of membership to Normal Pension Age
Tier 3 – If the member is likely to be capable of undertaking gainful employment within three years of leaving the employment or before normal pension age if earlier, that member is entitled to Tier 3 benefits for so long as the member is not in gainful employment, up to a maximum of three years from the date the member left the employment.
Benefits paid to the member – Benefits built up to date with no enhancement and eligibility is reviewed after 18 months.
Making the decision to award ill-health benefits to an active member
It is the employer who makes the decision to terminate a member’s employment on the grounds of ill-health, and it is also for them to decide whether to award 1st, 2nd or 3rd tier ill-health retirement benefits. However, this decision cannot be made without having first obtained an opinion from an Independent Registered Medical Practitioner (IRMP) qualified in Occupational Health medicine. The IRMP’s opinion should be provided by completing an ill-health certificate. See the section below on Approved IRMPs.
In the regulations, “gainful employment” means paid employment for no less than 30 hours in each week for a period of no less than 12 months.”
If an employer is intending to dismiss a LGPS member on ill-health/capability grounds, the following steps must be followed:
- The member must be referred to a qualified Independent Registered Medical Practitioner (IRMP). According to the LGPS Regulations this means an Independent Registered Medical Practitioner who is registered with the General Medical Council and;
- who holds a diploma in Occupational Health medicine (D Occ Med) or an equivalent qualification issued by a competent authority in an EEA state; and for the purposes of this definition, “competent authority” has the meaning given by section 55(1) of the Medical Act 1983(j); or
- is an Associate, a Member or a Fellow of the Faculty of Occupational Medicine or an equivalent institution of an EEA state;
Also, the IRMP from whom a certificate is obtained must not have previously advised, or given an opinion on, or otherwise been involved in the particular case for which the certificate has been requested.
Note: The administering authority, must give approval for the use of any IRMP who meets the criteria above.
Implementing the decision to award ill-health benefits to an active member
If the IRMP provides an opinion that the member meets the conditions set out the LGPS regulations that the member is;
1) As a result of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment the member was engaged in and that the member;
2) As a result of ill-health or infirmity of mind or body, is not immediately capable of undertaking any gainful employment.
As the scheme employer, you decide whether to award an ill-health retirement benefit based on the two conditions and if these are met, which tier to award according to the likelihood of undertaking any gainful employment.
The notice letter
You must inform the member of your decision both in cases of award of benefits or where benefits have not been awarded. Depending on the outcome of the employers decision the letter should inform the member of:
- the employers decision (whether an ill health benefit is to be awarded or not)
- inform the member that the employers decision has been made with reference to the IRMP’s opinion.
- Explain the decision made in the context of the regulations
- if a benefit has been awarded, the tier of ill-health benefit
- if tier three is granted, it must be mentioned that it is a temporary benefit and that there is a review at 18 months.
- if a decision of no award has been made, then the reasons of this decision should be included as to why the member has not met the conditions outlined in the regulations.
- information on how the member can appeal the decision must also be included, including the timescales for making an appeal. Contact details of the employer’s appointed person for appeals should also be provided
If a member is awarded a 3rd tier benefit, a review will need to be undertaken at the point when 3rd tier payments have been made for 18 months. The employer is required to write to the 3rd tier member asking for details of their employment status. If, from the information provided, the employer decides that gainful employment had been obtained, the 3rd tier payments should be stopped and deferred benefits awarded to the member. Alternatively it is possible that they are reassessed to 2nd tier following the review. In such a case you will need to contact the Pensions Team and ensure the review form is completed.
Some frequently asked questions on the Ill-Health Process can be found be clicking on Ill Health FAQs .
Transitional protection from the 1997 Scheme
Members who were in the LGPS and who had reached age 45 before 1 April 2008 who later retire on ill-health are entitled to the membership enhancement that would have been given under the 1997 regulations, if this pension benefit were greater than that granted under the 2014 regulations. This only applies to tier 1 and 2 as there is no enhancement for tier 3. The enhancement would still be treated as post-2008 Scheme membership (i.e. 60ths pension and no automatic lump sum).
Certificates to be used for active ill-health retirements
Employers cannot make a decision on an ill-health retirement without having first obtained an opinion from an Independent Registered Medical Practitioner (IRMP) qualified in Occupational Health medicine. The IRMP’s opinion should be provided by completing an ill-health certificate.
Please contact the Pensions Team if employers are unsure which certificate should be provided to the IRMP.
The Fund has a list of approved IRMPs. If an employer wishes to add an IRMP to the list they must first meet the regulatory requirements and then seek approval of the Fund to be added to the list from the Pensions Committee. Employers should remember the IRMP’s opinion is based on all the information supplied therefore before contacting an IRMP you should be sure all the relevant information has been gathered from the member.
How to obtain an opinion from the IRMP
To obtain an opinion from an IRMP, a Scheme employer must supply the appropriate certificate for the IRMP to complete. Please note if the IRMP completes the incorrect certificate the employer cannot make a decision regarding an ill-health retirement. The certificate to be completed is dependent on the members service in the Scheme. Employers should check with the Pensions Team if they are unsure which certificate to pass to the IRMP.
It is important for the employer to ask for a narrative report from the IRMP. A narrative report is a report to explain to the employer how and why the IRMP has reached their medical opinion. As the decision to award an ill-health retirement rests with the employer, it is important to have a full understanding behind the IRMP’s recommendations to help make that decision.
Preparing a referral to an IRMP
When preparing the referral to the IRMP employers should ensure they:
- Have met with the employee to explain the ill-health process and passed on the employee guide
- Ensure all relevant medical information has been collected and checked with member before submitting to IRMP
- Be very clear about the duties of the job in the referral information i.e:
- Focus on those duties the employee finds difficult with their medical condition
- Be specific: “is expected to carry a 15Kg sack 100m at least twice a day”
- Detail any adjustments made to help employee manage their ill-health
- Consider whether there are any other questions you would like a medical opinion on?
- Ensure correct certificate is provided
If you are using an Occupational Health Team (OHT) to assist you with the ill-health referral, remember to ensure you give full and clear instructions and whether you are asking for an opinion for an active or a deferred member. A deferred member is a former employee asking for early payment of benefits – see page Awarding ill-health benefits to deferred members.
What does the Pensions Team need in order to process an ill-health retirement?
- Completed leavers form PEN007
- Copy of the relevant certificate completed by IMRP
- Copy of the notice letter
- P45 (if available) – this should be sent in order for income tax deductions from the pension to be assessed.
Ill-health Statutory Guidance
Ill-Health Presentation – Employers Meeting January 2015
For further help and guidance view the below presentation. The PowerPoint can be viewed below.
Ill health PDF for scheme members