If you have to leave work due to illness you may be able to receive immediate payment of your benefits. Ill health benefits can be paid to you at any age. Your benefits will not be reduced because they are being paid early. In some cases, your pension will be increased to make up for your early retirement. The level of benefits depends on how likely you are to be capable of gainful employment after you leave.
To qualify for ill health benefits, you must have two years membership in the scheme. Your employer must also be satisfied that you will be permanently unable to do your own job until your Normal Pension Age and that you are not immediately capable of undertaking gainful employment. They should appoint an independent occupational health physician to give an opinion on this.
Gainful employment means paid employment for no less than 30 hours in each week, for a period of no less than 12 months.
The different levels of ill health benefit are:
Tier 1: If you are unlikely to be capable of gainful employment before your Normal Pension Age.
Ill health benefits are based on the pension you have already built up at your date of leaving the scheme plus the pension you would have built up. This is calculated on assumed pensionable pay, had you been in the main section of the scheme until you reached your Normal Pension Age.
Tier 2: If you are unlikely to be capable of gainful employment within 3 years of leaving, but are likely to be capable of undertaking such employment before your Normal Pension Age.
Ill health benefits are based on the pension you have already built up at your date of leaving the scheme, plus 25% of the pension you would have built up. This is calculated on assumed pensionable pay, had you been in the main section of the scheme until you reached your Normal Pension Age.
Tier 3: If you are likely to be capable of gainful employment within 3 years of leaving, or before your Normal Pension Age if earlier.
Ill health benefits are based on the pension you have already built up at your date of leaving. Payment of these benefits will be stopped after 3 years, or earlier if you are in gainful employment (or become capable of such employment), provided you have not reached your Normal Pension Age. If the payment is stopped it will normally become payable again from your Normal Pension Age but there are provisions to allow it to be paid earlier. Details would be provided at the time.
If you have previously received a Tier 1 ill-health pension from the LGPS, no enhancement can be added to your pension account if you are retired again for reasons of ill-health. The same applies if you were awarded an LGPS ill-health pension before 1 April 2008.
If you have previously received a Tier 2 ill-health pension from the LGPS, any enhancement due upon a subsequent ill-health retirement is adjusted and capped.
If, in respect of the subsequent ill-health retirement:
- you are awarded a Tier 1 pension… The enhancement cannot exceed three quarters of the number of years between the initial ill health retirement and your Normal Pension Age, less the number of years of active membership since the initial ill-health retirement, or
- you are awarded a Tier 2 pension… The enhancement received cannot exceed 25% of the value of the Tier 1 enhancement, as calculated in the bullet point above.
Where an enhancement is payable, the additional pension is added to your pension account.
During the period used to determine assumed pensionable pay, if you were working reduced contractual hours because of the ill-health which led to your retirement - the assumed pensionable pay is to be calculated on the pay you would have received during that period (had you not been working reduced contractual hours). An independent registered medical practitioner is required to certify this.
If you were paying into the LGPS before 1 April 2014, the pension you built up before then is based on your final pay when you leave the scheme.
Find out more about ill health retirement at the LGPS member website