11 Sep 2010, Time:01:10

Ill Health Retirement

The regulations related to ill health changed as of 1 April 2008; however some of the precise details were only confirmed more recently.

Where an Employer is considering dismissing a member on ill health grounds they must ensure that the member is seen by an occupational health practioner (as defined below) and they are assessed to see whether they meet any current three tiers.

Explanations of the tiers and procedures to follow are given below:

The Tiers

If a member has to leave work at any age due to permanent ill-health, the Scheme provides a tiered ill-health retirement package. This gives graded levels of benefit based on how likely they are to be capable of gainful employment after they leave.

Tier 1

This applies where:-

• the member has a qualifying period of at least 3 months or a transfer value is credited to the member.
• a certificate of ill health has been obtained by a occupational health practioner.
• based on that certificate, the employer has decided to terminate the member’s employment on the grounds that their ill health or infirmity of mind or body renders them permanently incapable of discharging efficiently the duties of their current employment and, because of that condition, they have a reduced likelihood of obtaining any gainful employment before normal retirement age AND
• the employer determines that there is no reasonable prospect of them obtaining any gainful employment before normal retirement age.

A 1^st tier ill health pension is awarded and the member’s normal benefits are increased as if the date on which they left LGPS employment was their normal retirement age and by adding the total membership at that date to the whole of the prospective service up to normal retirement age.

Note:

1. A provision for a different calculation in cases where the member works part-time.
2. A first tier pensioner is not subject to any review mechanism.

Tier 2

This tier applies where the circumstances are the same as those described in the first three bullet points above, but the employing authority determines it is likely that the member will become capable of obtaining gainful employment before their normal retirement age but cannot obtain gainful employment within three years of them leaving their current employment.

Where a second tier pension is awarded the member’s normal benefits are increased by adding to the member’s total membership at the time of leaving, 25% of their prospective service to normal retirement.

Note:

1. A different provision is put in place if the member is part-time.
2. A second tier pension is not subject to any review mechanism.

Tier 3

The 3^rd tier provides retirement benefits for a member who is judged by an Independent Registered Medical Practioner (IRMP) to be permanently incapable of their current employment AND has a reduced likelihood of obtaining gainful employment before their normal retirement age, but is also medically considered capable of obtaining gainful employment within three years of leaving employment. The member would be entitled to their accrued LGPS pension benefits, with no enhancement, and payments are made until such time as the member obtains gainful employment. Payments would be discontinued if, following a review, the IRMP certificate is to the effect that the member is now capable of gainful employment.

3^rd tier payments cannot, in any event, continue beyond three years.

For all of the above tiers, there are no direct cost implications for the Employer on a member taking an ill health retirement.

What you need to do?

Internal communications need to take place to decide whether the person appears unable to carry out the duties of their current job for the foreseeable future due to their health. If you believe this is the case you need to follow the following steps as needs be:

1. They must be referred to a suitably qualified occupational health practioner. According to the LGPS Benefit Regulations this means:
   • (a) holding a diploma in occupational 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 the General and Specialist Medical Practice (Education, Training and Qualification) Order 2003[5]; or
   • (b) being an Associate, a Member or a Fellow of the Faculty of Occupational Medicine or an equivalent institution of an EEA State.
2. The occupational health practioner needs to complete an Ill health certificate and send it to us, if they believe they meet the criteria (see bottom of this page). If they do not believe they meet one of the three tiers, you will need to complete a Leaver Form and send it to us in the normal way.
3. If they do sign them off on one of the three tiers, you will need to complete a Retirement form and send it to us.
4. If the member has been signed off on 3^rd tier benefits you will need to undertake a review at the point when 3^rd tier payments have been made for 18 months.  The employer should write to the 3^rd tier member asking for details of their employment status. If, from the information provided, the employer decides that gainful employment had been obtained, the 3^rd tier payments are discontinued and a repayment may be due (form can be found at bottom of this page). Alternatively it is possible that they are reassessed to 2^nd tier following the review in which case you will need to contact us telling us this and ensure the review form is completed.

What we need to do next?

The tier which they have signed off on (if any) will determine what we will need to do next to calculate their pension.

In all cases of retirement, we send the retiring Scheme member a pension pack and any lump sum cheque to their home address upon receiving the required forms from both the Employer and the member. Their pension will be paid on the 25th day of the month or the last banking day before this time if the 25^th of the month is not a banking day.

What the member needs to do?

All members will need to complete the member’s retirement action form that we will send them.

Members allocated to the 1^st or 2^nd tier will not need to do anything further as there is no review mechanism.

Members with 3^rd tier benefits are required to notify their previous employer when new employment is obtained and provide details, including the pay and working hours, of that employment. The employer considers the details regarding that employment and, if they decide it is gainful employment, payments are discontinued. The employer must notify us without delay when payments are to be stopped, and payments should be stopped from the date when gainful employment commences.

Further Information

• Full detailed guidance from the CLG
• Supplementary guidance for Independent Registered Medical Practitioners
• Ill Health Frequently Asked Questions

Certificates for active members and Tier 3 review form

• Ill Health Certificate (for determination after September 2008 for current employees) to be completed by a occupation health practioner
• Ill Health Retirement Review Certificate for a Current 3^rd Tier Pensioner – Review taking place within 3 years of date of cessation of employment.

Forms for deferred members

• Ill Health Certificate for a member with a leaving date before 1 April 1998
• Ill Health Certificate for a member with a leaving date between 1 April 1998 and 1 April 2008
• Ill Health Certificate for a member with a leaving date after 1 April 2008

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Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JJ.
© 2009 Wiltshire Pension Fund.

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