If you have to leave your local government employment at any age by reason of being permanently incapable of discharging efficiently the duties of that employment because of ill-health or infirmity of mind or body, you may be entitled to an ill-health retirement pension.
If ill-health retirement is granted you will receive your pension immediately. Your employer must be satisfied that, because of ill-health, you have become permanently incapable of doing your job and they will need to assess, with the help of a qualified Independent Registered Medical Practitioner (IRMP), the likelihood of you obtaining gainful employment in the future.
There are three tiers of ill-health retirement and it is the responsibility of the Scheme employer, with guidance from their approved IRMP, to determine which band each case should fall into.
Tier 1 - the employer determines that there is no reasonable prospect of the member obtaining gainful employment before their Normal Pension Age and so their benefits will be enhanced by 100% of the prospective pension build up to their Normal Pension Age.
Tier 2 - the employer determines that, although the member cannot obtain gainful employment within a reasonable period of leaving local government employment, it is likely that they will be able to obtain gainful employment before their Normal Pension Age and so their benefits will be enhanced by 25% of the prospective pension build-up to Normal Pension Age. (Please note: If you were a member of the LGPS on 31 March 2008 and were aged 45 or over at that time, you will receive an enhancement as applied under the Local Government Pension Scheme Regulations 1997 if better than the enhancement shown above).
Tier 3 - the employer determines that the member will obtain gainful employment within a reasonable period (defined as 3 years) and benefits built up to date can be released, unenhanced but have to be reviewed by the employer within 18 months and again after 3 years. The member will be held responsible for notifying their former employer if they obtain further employment. If after 3 years the member is still incapable of gainful employment, their case can be reviewed by a qualified IRMP who can advise as to whether the benefits in payment could be 'upgraded' to a tier 2 ill-health case.
Tier 1 ill-health:
If your employer determines that you have no reasonable prospect of obtaining gainful employment before your Normal Pension Age your benefits will be calculated using your membership accrued to date plus all of the assumed pension you would have built up had you remained in your job until your Normal Pension Age.
Assume a member who is aged 33 with 5 years of membership. It is determined that they have no reasonable prospect of obtaining gainful employment before their State Pension Age of 68. The membership used to calculate his benefits will be:
Accrued membership: 5 years
Additional membership to 68: 35 years
Total membership: 40 years
If your employer determines that, although you will not obtain gainful employment within a reasonable period of leaving your job but you are likely to obtain gainful employment before your Normal Pension Age, your benefits will calculated using one quarter of the assumed membership that you would have built up had you remained in your job until your State Pension Age.
Tier 2 ill-health:
Taking the same member as per the above example, the membership now used to calculate benefits would be:
Accrued membership: 5 years
Additional membership (35 years x 25%): 8.75 years
Total membership: 13.75 years
Tier 3 ill-health:
A third tier of ill-health benefit is also available if your employer determines that you cannot currently continue working because of ill-health but have a reasonable prospect of obtaining gainful employment within 3 years. In this instance your benefits built up to date in the LGPS will be released without enhancement but you become responsible for informing your employer when you do obtain further gainful employment. In any case, your employer is required to review your circumstances 18 months after the point from which your benefits were brought into payment.
Further points to consider:
- For the purposes of ill-health retirement the regulations define gainful employment as being paid employment for not less than 30 hours in each week for a period of not less than 12 months. A reasonable period is also defined as being 3 years.
- It is important to note that the independent registered medical practitioner must be in a position to certify, and must include in the certification, a statement that they have not previously advised, given an opinion on, or otherwise been involved in your case and that they are not acting, and has not at any time acted, as your or your employer's representative.
- Regardless of the 85-year rule, your benefits will not be actuarily reduced if you have to retire early due to permanent ill-health.
- If you are paying Additional Pension Contributions (APCs) and you retire due to permanent ill-health, you will be treated as having paid the full value of your APCs to the end of your prescribed payment period and, therefore, your pension will be calculated taking into account the full amount of pension that you had elected to purchase – even though you would not have completed all payments.