What happens if I have to retire early due to permanent ill health?
If you have to leave work due to illness you may be able to receive immediate payment of your benefits.
To qualify for ill health benefits you have to have met the 2 years vesting period in the scheme and your employer, based on an opinion from an independent occupational health physician appointed by them, must 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.
Ill health benefits can be paid at any age and are not reduced on account of early payment – in fact, your benefits could be increased to make up for your early retirement.
There are graded levels of benefit based on how likely you are to be capable of gainful employment after you leave.
- 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 in your pension account at your date of leaving the scheme plus the pension you would have built up, 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 in your pension account at your date of leaving the scheme plus 25% of the pension you would have built up 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 in your pension account at 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 by then. 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.
Gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months.
However, if you have previously received a Tier 1 ill-health pension from the LGPS, or were awarded an LGPS ill-health pension before 1 April 2008, then no enhancement can be added to your pension account if you are retired again for reasons of ill-health.
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 or Tier 2 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.
Where an enhancement is payable, the additional pension is added to your pension account.
Where an independent registered medical practitioner certifies that, during the period used to determine assumed pensionable pay, 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.
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.