An ill-health retirement is a retirement before normal pension age under the grounds of ill-health. To be eligible for an ill-health pension your employer must initiate the ill-health process and certain conditions must be satisfied. It is only possible to receive an ill-health pension if you are currently an ‘active’ member (a scheme member currently paying in pension contributions) of the LGPS who is dismissed on the grounds of ill-health. Therefore, if you voluntarily leave your employment you do not qualify for an ill- health pension.
Conditions to be satisfied
If you have been in the scheme for a period of 2 years, and providing your employer agrees, you could receive your pension benefits before you reach normal pension age if you satisfy certain conditions. An Independent Registered Medical Practitioner (IRMP) provides an opinion to your employer as to whether you are permanently unable to do your job because of illness and if you satisfy the following conditions:
- That as a result of ill-health or infirmity of mind or body, you are permanently incapable of discharging efficiently the duties of the employment you were engaged in.
- as a result of ill-health or infirmity of mind or body, you are not immediately capable of undertaking any gainful employment.
What pension would I receive?
The amount of the retirement pension that you would receive if you satisfy the above conditions is determined by which of the 3 benefit tiers apply to your degree of incapacity. The decision about which tier you qualify for is made by your employer after they have obtained an opinion from an IRMP. The 3 tiers that may be awarded are:
Tier 1 Ill-Health Retirement Benefit –
If you have no reasonable prospect of being capable of obtaining gainful employment before normal pension age, ill-health benefits are based on the membership you would have had if you had stayed in the scheme until normal pension age.
Tier 2 Ill-Health Retirement Benefit –
If you are unlikely to be capable of obtaining gainful employment within 3 years of leaving, but you may be capable of doing so before normal pension age, then ill-health benefits are based on your membership built up to leaving plus 25% of your prospective membership from leaving to normal pension age.
Tier 3 Ill-Health Retirement Benefit –
If you are likely to be capable of obtaining gainful employment within 3 years of leaving, or before normal pension age if earlier, ill-health benefits are based on your membership at leaving. Payment of these benefits will be stopped after 3 years, or earlier if you are in gainful employment or become capable of getting such employment.
Gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months. If you are part-time, any extra membership awarded due to ill-health retirement will be reduced to reflect your part-time hours at leaving, disregarding any reduction in hours due to your illness.
If you were in the LGPS on 31 March 2008 and were aged 45 or over on that date, there are protections to ensure your ill-health retirement benefits are no less than they would have been under the Scheme as it applied before 1 April 2008.
Further information on ill-health retirement is available by contacting the Pensions Team or by reading our “Can you tell me about ill-health” leaflet.