Ill health retirement

Contents

Active Members

Ill Health Retirement can be awarded to any active member, whatever their age, providing they have been a member of the scheme for two years or more. There is no reduction to benefits for retiring early.

The employer decides whether a member qualifies for ill health retirement, after obtaining medical advice from an Independent Registered Medical Practitioner (IRMP), together with a completed Ill Health Certificate. The member must have their employment terminated by the employer for reasons of ill health or infirmity of mind or body.

The IRMP must be registered with the General Medical Council and must either hold a diploma in occupational health medicine or be an Associate, a Member, or a Fellow of the Faculty of Occupational Medicine (or equivalent in the EEA). The IRMP must not have advised in the case previously and must be approved by Surrey Pension Fund.

To request approval of an IRMP by the Governance Manager, please complete the Employer Application to Approve IRMP form and email it to crtpensions@surreycc.gov.uk

Ill Health Criteria

To qualify for Ill Health Retirement, the member must be permanently incapable of discharging efficiently the duties of their current employment until their State Pension Age (or age 65 if earlier.)

The member must also not be immediately capable of undertaking any gainful employment. Gainful employment is classed as paid employment for not less than 30 hours in each week for a period of not less than 12 months.

The IRMP will need to advise when the member is likely to be able to return to gainful employment and the employer must decide, taking this advice into consideration, whether to grant Ill Health Retirement and what level of benefits to award.

Tier 1 Benefits

Tier 1 benefits apply to the most serious cases of ill health, where the member has little prospect of being capable of undertaking gainful employment before Normal Pension Age (NPA).

NPA for member's in the 2014 scheme is defined as their state pension age, or age 65 if later.

The member will receive the benefits they have accrued to the date of leaving employment, which are payable immediately and unreduced, together with an enhancement to their NPA based upon their Assumed Pensionable Pay (APP.)

Tier 2 Benefits

Tier 2 benefits apply to members who have little prospect of being capable of undertaking gainful employment within the next three years but are deemed as likely to be able to do so before Normal Pension Age.

The member will receive the benefits they have accrued to the date of leaving employment, which are payable immediately and unreduced, together with 25% of the enhancement to their NPA based upon their Assumed Pensionable Pay (APP.)

Tier 3 Benefits

Tier 3 benefits can only be paid for maximum of three years.

These benefits apply to members who are deemed as likely to be able to undertake gainful employment within 3 years.

The member will receive the benefits they have accrued to the date of leaving employment, which are payable immediately and unreduced. There is no enhancement.

The member is legally required to tell the employer about any new employment. The employer must decide whether the new job meets the definition of gainful employment, even if the member has not worked in it for a full year. If it does, you must inform us to discontinue the pension as soon as possible to avoid overpayment.

18 Month Review

Once the Tier 3 benefits have been in payment for 18 months, the employer is required to review the pension. The employer must obtain another certificate from the IRMP and decide whether to:

  • Cease the pension
  • Continue paying the pension until the member undertakes gainful employment or the 3-year anniversary, whichever is sooner.
  • Increase the benefits to Tier 2.

The member can request for the pension to be reviewed within the 3 years that it is in payment, or up to 3 years after cessation.

Once ceased, the members pension becomes a deferred benefit payable unreduced at their NPA, or if taken from age 55, payable with reduction.

Deferred Benefits

If the member falls ill after leaving the LGPS, where they have deferred benefits (including Tier 3 deferred benefits), they may apply to their previous employer for immediate payment of their retirement benefits.

The employer must decide, after taking advice from an IRMP, that the member satisfies the conditions for Ill Health Retirement:

  • Leaver on or after 1 April 2008 – permanent incapacity based on their old employment and a reduced likelihood of gainful employment for at least 3 years or to NPA if earlier.
  • Leaver before 1 April 2008 - permanent incapacity based on their old employment to NPA.

The member will receive their deferred benefits, which are payable unreduced. There is no enhancement.

Cost of Ill Health Retirement

A certain level of ill health retirements are accounted for in the contribution rate, which is reviewed every three years as part of the Fund valuation.

What you need to complete

Once you have received confirmation of the Independent Registered Medical Practitioner (IRMP) from the Surrey Pension Team Governance Manager (via the Employer Application to Approve IRMP form) - then please complete the retirement datafile (LG4) and return it to lgps.forms@surreycc.gov.uk via Egress Switch.

Please ensure that you indicate on the retirement datafile (LG4) which Tier of Ill Health Benefits that you have awarded. Please send the Ill Health Certificate completed by the IRMP to lgps.forms@surreycc.gov.uk.

Once we have received your documents, we will send the member a quotation of their retirement benefits, and the forms that they need to complete and return.

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