Ill Health

Suffering ill health is not something any of us plan for but can happen, and if it does it can affect your ability to work. We understand this and in certain circumstances your pension can be paid early if you do suffer ill health. This page provides all the information need to know about claiming benefits on grounds of ill health.

Understanding the basics

When ill-health stops you from working, it’s sometimes possible to take your full pension early, regardless of your age. But it is quite a complex process and depends on a number of factors – including your employer’s consent, the severity of your illness and whether you’re condition is ever likely to improve.

Meeting the right criteria

As an active member of the pension scheme, there are certain criteria you must meet to qualify for ill-health retirement. You should start ask yourself three questions:

  1. Have you been in the Local Government or Police pension scheme for at least 2 years, or the Fire pension scheme for at least 3 months?
  2. Are you still under your Normal Pension Age?
  3. Are you permanently unable to do your current job for medical reasons?

If the answer to all three questions is YES, then you may be eligible for retirement on ill-health grounds.

Assessing your condition

Before making any decisions, your employer will consult with an Independent Medical Practitioner (approved doctor) to see if you meet the two main conditions for ill-health retirement:

  1. You are permanently incapable of carrying out the duties of your current job.
  2. You are not capable of carrying out any type of gainful employment (being able to work up to 30 hours a week for a 12-month period).

Determining your eligibility

After reviewing the doctor’s assessment, your employer has the final decision. If they accept your application, they may award you one of three different types of pension:

Local Government Pension Scheme only

Tier one pension (permanent and payable for life)

Awarded if you are unable to carry out the duties of your current job and unlikely to manage gainful employment before your Normal Pension Age.

Tier one benefits are calculated by looking at your current pension pot and adding an ‘ill-health enhancement’ – based on the extra money you would have accrued up to your Normal Pension Age.

Tier two pension (permanent and payable for life)

Awarded if you are unable to carry out the duties of your current job and unlikely to manage gainful employment for at least three years – although you may work again before your Normal Pension Age.

Tier two benefits are calculated by looking at your current pension pot and adding an ‘ill-health enhancement’ – based on 25% of the extra money you would have accrued up to your Normal Pension Age.

Tier three (payable immediately, for a maximum of three years)

Awarded if you are unable to carry out the duties of your current job, but likely to manage work in another role within three years.

Tier three benefits are calculated based on your current pension pot (without any ill-health enhancement).  They are payable for up to three years, but may be stopped if you start a new job or the doctor decides your capable of working following your 18-month review.

Once your tier three pension has stopped, it will normally become payable again at Normal Pension Age (NPA).

Fire and Police Pension Scheme only

  • Upper Tier pension

Awarded if you are unable to carry out the duties of your current job and unlikely to manage gainful employment before your Normal Pension Age.

  • Lower Tier pension

Awarded if you are unable to carry out the duties of your current job until your Normal Pension Age.

Important information

Just because you’re dismissed from your employment on health grounds, doesn’t mean you will be automatically eligible for an ill-health pension. You will still need to satisfy the criteria outlined above.

Putting in an application

How the process works

If you’re thinking of applying for retirement on ill-health grounds, but don’t know where to begin, here’s a summary of how it works.

  1. Speak with your employer

The first thing to do is get in touch with your employer. This will give you an opportunity to explain your situation, ask questions and understand your options.

2. Your employer will arrange a doctor’s assessment

Even if you’ve already seen a doctor and been in touch with occupational health, regulations insist that your employer must consult with an Independent Medical Practitioner (approved doctor), who has not had any previous involvement in your case.

Your employer will pass on details about your job and let the doctor know if your illness has already resulted in reduced hours and less pay. You will also be asked to provide as much information as you can about your condition. Your GP or Consultant may be able to assist you with this part of the process.

If your treatment is still ongoing, it may be worth waiting until it is completed before submitting an application. This will make it easier for the doctor to make an accurate assessment.

3. Doctor assessment

The doctor will assess your case based on the information they have been given by you and your employer – along with any additional evidence passed on by your own doctor or occupational health.

4. Possible consultation with the case doctor

If you provide detailed information and give consent for your GP/Consultant to share your medical information, you may not need a face-to-face assessment. Although, if you would prefer to see the case doctor in person, this can be requested via your employer (although in some cases, it is not always possible).

5. Doctor’s report passed to your employer

A typical assessment can take between 4-12 weeks. Once the doctor has completed their review, they will pass on a medical certificate to your employer, confirming whether you meet the ill-health retirement criteria. They will also give an opinion on whether you should be eligible for a tier 1, tier 2 or tier 3 pension (Local Government Pension Scheme) or an Upper or Lower tier (Police or Fire Pension Scheme).

Possible outcomes

What happens next

After completing their assessment, the doctor passes a certificate to your employer, which outlines whether or not you meet the criteria for ill-health retirement. Your employer will make the final decision and confirm to you in writing whether your application has been accepted.

Essentially, there are two possible outcomes

  1. Consent is given for ill-health retirement

If your application has been accepted, your employer will let you know their decision in writing. They will also confirm which tier of pension you are eligible for. This determines the level of benefits you receive and for how long.

2. Consent not given for ill-health retirement

If your application is refused, then your pension would be deferred.

You can, of course, apply for ill-health retirement again in the future. If you meet the criteria this time, your benefits would be released early without any reductions. But if your pension has already been deferred, you would no longer be entitled to any enhanced benefits.

Another consideration might be to transfer your deferred benefits into a personal pension plan. Just be aware that there are pros and cons to doing this, so always get independent financial advice before you make a decision.

Appeals Process

If you don’t agree with your employer’s decision, full details of how to appeal will be included in the letter from your employer. Further information is also available on our website.

Accessing your pension

Putting the wheels in motion

As soon as we receive confirmation that you are eligible to receive your pension, we get your money ready for you as quickly we can. The whole process can often be done and dusted within two weeks.

  1. Your employer notifies us

If you’re still paying into your pension scheme, your employer provides us with your Leaver form and pay figures up to the last date of your employment. If you’re no longer an active member, we already have this information on our records.

2. We take care of the paperwork

We check all the details and contact your employer directly if we require further information. Once we have everything we need, it usually takes around 10 days to process. We then upload your Retirement Options to your online account… or send you a retirement pack through the post.

3. You sign on the dotted line

In your retirement pack, you’ll find a quote, which includes any Additional Voluntary Contributions (AVCs) or Additional Pension Contributions (APCs) you might have paid. This quote explains:

1.            The maximum monthly payment you could receive

2.            The maximum lump sum you could take

If you’re happy, all you need to do is complete the ‘Retirement form’ and send it back to us along with any additional documents we may have requested (such as a copy of your birth certificate). Remember you will only need to do this if we send you a Retirement Options pack.

4. You receive your lump sum and monthly payments

As long as we have all the required information, your pension payments will start on the agreed date and you’ll receive your tax-free lump sum shortly after. Any documents are returned to you by post.

Ill health and deferred pensions

Can I still claim my benefits early?

You don’t have to be an active member of a pension scheme to claim your pension on ill-health grounds. Although you wouldn’t be eligible for any enhanced benefits, you may be able to take your pension early, without any reductions. Here’s how you go about it:

Step 1 – Put it in writing

Send us a letter or email explaining why you want to apply for ill-health retirement. Include full dates of your employment and as much supporting evidence as you can (all medical forms will always be returned). We will then contact your former employer and pass on your request.

Step 2 – Occupational Health appointment

Your former employer will refer you for an occupational health appointment to assess your case. They will then use the medical practitioner’s report from this appointment to approve or decline your request.

Step 3 – Confirmation letter

You will receive confirmation in writing. If your application is approved, you will be sent the forms you need to access your pension. If it’s declined, you will be given an explanation of the decision, along with details of how you can appeal.

Step 4 – Benefits released

Once the paperwork has been completed, any eligible pension benefits will be released. You may also be given the option of converting some of your annual retirement income into a tax-free lump sum.

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