Ill Health Retirement
If you have 3 months membership, your employer can award you ill health benefits at any age, as long as you meet various conditions. In assessing this, they will consult a specially qualified doctor, and will then make various decisions about the impact of your illness on your own job and your capability for other gainful employment.
A 3 tier system
To retire you on ill health, your employer must decide that you are permanently unable to do your own job and not immediately capable of other gainful employment. If so, you will be awarded ill health benefits - in other words benefits without an early retirement reduction, and in some cases, based on extra membership too.
There are 3 ill health tiers and in deciding which tier you fall into, your employer must consider how capable of gainful employment you would be now and in the future.
Tier 1
No reasonable propect of being capable of gainful employment now or at any age before age 65. You will get a pension and normally a lump sum based on the membership you have built up so far PLUS all the extra membership you would have built up if you had remained a member to age 65.
Tier 2
Not capable of gainful employment now or at any time in the next 3 years, but likely to be capable of gainful employment before age 65. You will get a pension and normally a lump sum based on the membership you have built up so far PLUS 25% of the extra membership you would have built up if you had remained a member to age 65.
Tier 3
Not capable of gainful employment now, but likely to be capable in the next 3 years. You will get your lump sum (if applicable) to keep. But your pension will only be paid for a limited time, and will be reviewed after 18 months.
Under Tier 3 your pension will stop:
- As soon as you take up gainful employment again
- If recommended at the 18 month review, or
- After 3 years have passed
Protection for members who were in the LGPS before 1 April 2008 and were at least age 45
In these circumstances, for a member judged eligible for a 1st or 2nd tier enhancement, an employer will consider the benefits under both the 1997, and the 2007 ill health regulations as amended. They will make a comparison of the calculations, with the enhancement of prospective service for both calculations at the 1/60th accrual rate, and award benefits that are the greater of the two.
Ill Health FAQs
What is the minimum period of membership I need to be entitled to ill health benefits?
3 months
What do you mean by "gainful employment"?
"Gainful employment" means working 30 hours per week for at least a year.
Is there any impact if I am part time when I retire on ill health?
Any extra membership will be adjusted to reflect your part time hours on leaving
If I retire on ill health can I still swap pension for lump sum at the rate of £1 pension to £12 lump sum?
There is nothing written in the Regulations that would stop you doing this - even on tier 3
You can find more detailed information about ill health retirement in our employers guide along with more detailed FAQs.
Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JN.
© 2009 Wiltshire Pension Fund.