Ill Health Retirement Guide – Active Members

To be eligible for an ill health pension you must:

• be under Normal Pension Age (NPA)
• be dismissed by your employer because of ill health
• have at least two years of qualifying membership in the LGPS (at the date you leave)
• meet the LGPS criteria for retiring on ill health

As your employer is not a medical expert they will consult with an independent registered medical practitioner (IRMP) appointed by them, to be satisfied that you meet two main conditions:

1. you are permanently incapable of doing your current job
2. you are not immediately capable of carrying out any type of gainful employment (gainful employment means paid employment for at least 30 hours a week for a period of at least a year)

You can only receive an ill health pension if your employer is satisfied that your illness meets both criteria. They will also consult with the IRMP to confirm whether you’re a tier 1, tier 2, or tier 3 ill health case. Further information on the tiers can be found in the ‘Decision’ section.

In all cases, your ill health benefits will be based on the benefits you have built up so far, and will be paid without any early retirement reduction.

Shown below is an overview of the process:

Step 1: Application
Apply to your employer to pay your pension benefits on ill health grounds.

Step 2: Referral
Your employer refers your case to an independent registered medical practitioner (IRMP) appointed by them.

Step 3: Medical review
The IRMP reviews the information and issues an ill health certificate.

Step 4: Decision
Your employer will make a decision on the ill health retirement and, if your application has been successful, which tier of benefits will be paid. Your employer will let you know their decision; they will also notify the pension team if your application has been successful.

Step 5: Pension quote
The pension team will send you a retirement quote.

Step 6: Payment of pension benefits
The Employment Support Section (North Yorkshire Council) will pay your monthly pension. The pension team will pay any tax free lump sum.

If your employer is ending your employment due to your ill health you should also be considered for ill health retirement. The criteria used in the LGPS to consider ill health retirement is very different to the criteria your employer may use when deciding whether to dismiss you on medical grounds. You might not meet any of the LGPS criteria for ill health retirement even if your employer dismisses you on medical grounds.

If you think you might meet the LGPS criteria but your employer has not discussed this with you then you should ask for this to be considered. If you resign/leave voluntarily, ill health retirement cannot be considered. If you subsequently apply for and are granted payment of deferred benefits on ill health (see ‘Decision’ section for further information), the amount you would receive may be less than what you would have been paid had your employer retired you on ill health grounds. Please think carefully before resigning.

Under the LGPS regulations your employer must consult with an independent registered medical practitioner (IRMP) to assess your case. To help the IRMP understand and assess your case your employer will provide details of your job description, information from occupational health and any other information such as the impact your health has had on your employment. You will need to give your consent for your employer to provide the information to the IRMP, you can also submit any additional medical information or issues that you think should be included in the referral. It is in your interest to help the IRMP fully understand your medical condition, we recommend you are fully involved in gathering information for your case.

The IRMP will receive the referral from your employer. They will use their medical knowledge, the information provided by your employer and any information that you have provided to decide whether you meet the LGPS ill health criteria. The IRMP does not have to see you in person and is allowed to carry out a paper review of your case. Remember, the IRMP is considering if you are permanently incapable of doing your current job and whether you are immediately capable of carrying out any type of gainful employment.

If the IRMP decides that you do meet the criteria they will give an opinion on when you are likely to be capable of gainful employment and therefore which tier of ill health retirement you could receive. If in the opinion of the IRMP you do not meet the LGPS ill health retirement criteria, your employer will consider this when making their decision. The IRMP will write to your employer with a medical certificate confirming their opinion.

On receipt of the medical certificate from the independent registered medical practitioner it is your employer that makes the final decision on whether or not to release your pension benefits on ill health grounds. Your employer will normally agree with the approved doctor’s findings if they are happy that the criteria has been applied correctly.

If your employer does not agree to ill health retirement
Your pension benefits will normally be deferred (put on hold). Remember you must have at least two years membership of the scheme (at the date you leave). You can claim your deferred benefits from age 55 but they will be reduced for early payment. You can also transfer your deferred benefits to another pension provider (as long as you have more than one year to your normal pension age).

The Government has announced the earliest age that you can take your pension will increase from age 55 to 57 from 6 April 2028.

If you become permanently incapable of doing the job you were working in when your employment was terminated, either because your condition has become worse or you have a further illness, you can apply for payment of your deferred benefits on ill health grounds. You should contact your former employer to discuss this. Deferred benefits paid on ill health grounds are not reduced for early payment but they do not receive any enhancements.

If your employer agrees to ill health retirement
You will be contacted by your employer confirming the decision and which tier of ill health you have been awarded. The tier affects the level of benefits payable and how long they are paid for as follows:

Tier 1
Awarded if you cannot do your job and 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 the date of ill health retirement, plus the pension you would have built up had you been in the main section of the scheme until your normal pension age. *

Tier 2
Awarded if you are unlikely to be capable of gainful employment within 3 years of leaving, but are likely to be capable of doing so before your normal pension age.

Ill health benefits are based on the pension you have already built up at the date of ill health retirement plus 25% of the pension you would have built up had you been in the main section of the scheme until your normal pension age. *

Tier 3
Awarded if you are likely to be capable of gainful employment within 3 years of leaving, or before your normal pension age if earlier.

An ill health review will be carried out by your employer 18 months after you start receiving your ill
pension. The review will check whether:

1. 1. you are in or have become capable of gainful employment, in which case your pension will be stopped
   2.  your condition has got worse which may result in an uplift to a tier 2 ill health pension, or
   3. your condition has remained the same in which case the pension will remain at the same level for the remainder of the 3 years.

Ill health benefits are based on the pension you have already built up at the date of ill health retirement.

Payment of this benefit 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.

*Please note that if you retire on ill health under tiers 1 or 2, were a member before 1 April 2008 and were aged 45 or over at that date you will be given the enhancements from the ‘old rules’ if these would be better.

Appealing the decision
If you are unhappy with the decision made by your employer you can use the Internal Dispute Resolution Procedure (IDRP) to appeal, see the guide and form.

The pension team will receive a copy of your employer’s decision and the ill health certificate together with a leavers form confirming your final pay information. Once all this information is received you will be sent a quote confirming the pension benefits payable together with an option form and retirement claim form. You will need to return the completed forms before payment can be made.

Further information can be found in ‘retirements‘.

The pension team will tell you when your benefits will be paid. Lump sum payments (if applicable) are made every Friday and payment will be made on the first available Friday following receipt of all the relevant paperwork. This can be up to 4 -6 weeks after your retirement date. Pension payments are made by BACs into your chosen bank account on the last working day of each month and are processed by the Employment Support Service at North Yorkshire Council. Due to payroll deadlines it is likely that your first pension payment may be paid up to 2 months after you have retired but payments will be backdated.