If a member of staff is too ill to efficiently carry out the duties of their employment, they may be able to receive an ill health pension. This pension is not age related, but the member must:
- Have at least two years qualifying membership in the scheme. The regulations detail what counts as qualifying, as this may include certain transfers
- Satisfy the ill health retirement criteria.
This guidance only relates to ill health retirements for active members of the scheme.
It is important to note that the decision is made by the employer, having sought the opinion of the independent registered medical practitioner IRMP. The decision is not made by the IRMP. The IRMP must have the recognised certification in occupational medicine.
The guide to Ill health retirement for scheme members will also be useful for employers.
The most frequently used ill health certificates are on the pension scheme forms for employers page.
What will the member receive?
The amount of the benefits payable, and how long they are payable for depends on the capability of the member being able to undertake gainful employment. There are three categories:
If there is no reasonable prospect of the member being capable of undertaking any gainful employment before his normal retirement date, then we will pay an increase related to the pension they may have built up had they stayed within the scheme until their state retirement age.
Although the member is unlikely to be capable of undertaking any gainful employment within three years of leaving local government employment, it is likely that they will be capable of undertaking gainful employment before their state retirement age . The pension payable will be based on the pension up to date of leaving plus 25% of the pension they may have achieved if continued in employment to state retirement age.
Enhancements in tier one and two are based on the member’s ‘annual rate of assumed pensionable pay'.
If the member is likely to be capable of undertaking gainful employment within three years of leaving employment, then we will pay the member's unreduced pension for no more than three years. The pension will then be reinstated once they reach retirement age.
The employer must organise a review of the member's medical situation after 18 months. (There is more about the 18 month review in the section below)
During the three years the member must tell their previous employer if he or she takes up any employment and the employer will have to decide if the employment is 'gainful'. If the employer believes it is gainful employment, the pension will then be suspended.
What if the member does not meet ill health retirement criteria?
If the member doesn’t satisfy the main ill health criteria, the member will not receive any benefits on ill health retirement.
What do employers need to do in the case of Ill health retirement?
The full procedure of monitoring sickness, following your employer’s policy and then looking into ill health retirement can be a long process.
The DCLG has issued statutory guidance and also responded to frequent questions and all employers and the independent medical advisors should refer to these papers where the latest FAQ document is dated April 2015.
The action points for employers when considering an ill health retirement are:
The employer must ensure they have an Independent Registered Medical Practitioner (IRMP) approved by the Pension Services Manager.
The employer should monitor sickness and, when appropriate, request the IRMP assesses the member based on the questions asked in the Ill health certificate. The employer will need to provide some evidence regarding their job role.
The IRMP should complete part B of the ill health certificate and supply an accompanying report. The employer must ensure the IRMP's report is consistent with the answers on the certificate, the correct questions have been answered and the opinions are not perverse.
- The employer must decide if the member is entitled to an ill health pension and if so, which tier this will be based on.
- Once the decision has been made, the employer must complete Part C of the ill health certificate form and forward this to Pension Services to calculate the benefits
What to do next
Once the employer has made their decision, agreed the last day of service and informed the member, the employer sends to Pension Services.
- The correctly completed ill health certificate and any other supporting reports from the IRMP
- Advice to Pension Services concerning the member’s annual rate of assumed pensionable pay (AAPP)
- Full leaver information in the MARS return
Pension Services will contact the member to explain any choices available to the member.
Tier 3 pension
A tier three pension is a temporary pension, and will be reviewed.
Pensioners receiving a tier 3 ill health retirement must inform you when they have started a new employment. You must set up a review to decide if the employment is 'gainful'. If you decide the employment is gainful employment, you must advise Pension Services to stop payment of the pension.
18 month review
If the member has retired under tier 3 ill health, the employer must contact the member after 18 months, unless the member will be over state pension age at the date of the review. This review is to determine whether the person has undertaken any gainful employment and if they have not, it is to determine whether:
- The member is capable of undertaking gainful employment, and if so the pension will stop;
- The member's condition has deteriorated and therefore the pension increased to a tier 2 ill health; or
- There is no change and the pension continues for a further 18 months;
- At the 18 month review, you should arrange for the member to be re-assessed by your Independent Registered Medical Practitioner, a certificate can be obtained from Pension Services.
It is the employer who makes the decision and advises Pension Services and the member of the decision and the date the determination was made.
If the decision has been made to award a tier 2 ill health retirement, Pension Services will contact the member about putting the new pension into payment.
Annual rate of assumed pensionable pay Regulation 21
Some frequently asked questions posed by employers
Where do I find an independent registered medical practitioner (IRMP), certified to practice Occupational Health medicine?
Remember you cannot use the same specialist for the LGPS ill health retirement process, as the one who has perhaps been advising you for work place adjustments. There is general guidance from the Faculty of Occupational Medicine on appointing an occupational health specialist.
As the LGPS regulations require your medical advice to come from suitable qualified practitioners you can check the register.
How does the fund approve the IRMP?
Supply the doctor’s details and an example of their signature to Pension Services for approval, before referring your employee’s case.
Where can I find background information or steps to follow?
There is statutory guidance about ill health retirement, and it is required reading for employers and their medical advisors.
- LGPS Regulations - Last updated June 2015
The Pension Ombudsman, on the strength of their complaint management, has issued guidance which you may find helpful:
And the medical certificate itself, pushes the process of decisions within the regulations.
Our website has a member’s guide about ill health retirement within the LGPS which may also be useful, under a dropdown tab on the Current members page.
How can I make this decision- I am not a medical expert?
The decision is for the employer to make – because that is the regulatory requirement. You collect information, and expert opinion to go towards the decision - but the decision must clearly be the employers.
You have opportunity to supply full employment details and expectations to the medical advisor and the member too has opportunity to bring in specialist reports, details of treatments to the IRMP. This information will feed into the IRMP report and their opinion, which you use to come to a decision.
The decision-making role is not easy, but decisions are in the more likely than not area, and on the balance of probabilities reaching reasonable conclusions.
What happens if I don’t agree with the medical opinion?
The employer is the decision-making body, and you can get an alternative opinion if you wish, or question further the one you have received to better understand the opinion given.
The employer’s decision will be guided by the medical opinion, and you must be able to support the reasons for your decision, remembering that non-medical factors (such as availability of other employment) are not material factors for these decisions.
Am I terminating the employment on grounds of permanent ill health? Does this mean the notice is intrinsically linked the reason for leaving?
You are terminating the employment. If the member qualifies (membership and your ill health decision) then an entitlement to immediate payment of pension follows. How much and for how long depends on your decision.
After this decision is it the end of my involvement?
Many ill health decisions are for a tier three award. This means the payment is conditional and employers must keep in touch with their former employee.
- The member must tell you if they take up other employment, and you need to assess if this affects the award you have made;
- You must set a review at 18 months and decide on continuing payment, change the decision or stop the payment
- Tier three would stop after three years.
When you advise the member of your decision, regardless of the tier and like any decision made within the regulations, you inform the member of their right of appeal.
How do I tell someone about their right to appeal a decision?
Your notice could include something along these lines:
If you are in any doubt about this decision and your LGPS benefit entitlements, or have a problem or question about your LGPS membership or benefits, contact -- insert. We will seek to clarify or put right any misunderstandings or inaccuracies as quickly and efficiently as possible.
If you are unhappy with any decision made in relation to the scheme you have the right to have your complaint reviewed under the scheme’s Internal Disputes Resolution Procedure. This is the formal two stage process. If you are still dissatisfied, there are also other regulatory bodies that may be able to assist you. The Pensions Ombudsman deals with complaints, while the Pensions Advisory Service is for guidance and information.
Internal Disputes Resolution Procedure / Adjudication of Disagreements Procedure:
In the first instance you should write to this body’s adjudicator - name or contact, you must do this within six months of the date of the notification of the decision or the act or omission about which you are complaining (or such longer period as the adjudicator considers reasonable). This is a formal review of the initial decision or act or omission and is an opportunity for the matter to be reconsidered. The adjudicator will consider your complaint and notify you of his or her decision.
If you are dissatisfied with that person’s decision, (or their failure to decide) you may apply to the Oxfordshire Pension Fund Services Manager to have it reconsidered.
There is a form and detailed leaflet for the Resolution Procedure on the member’s form page of the forms and guides for LGPS members page.
The Pensions Ombudsman:
The TPO deals only with pension complaints. It can help if you have a complaint or dispute about the administration and /or management of personal and occupational pension schemes. Some examples of the types of complaints it considers are (this list is not exhaustive):
- automatic enrolment
- benefits: including incorrect calculation, failure to pay or late payment
- death benefits
- failure to provide information or act on instructions
- ill health
- interpretation of scheme rules
- misquote or misinformation
You have the right to refer your complaint to the TPO free of charge. There is no financial limit on the amount of money that TPO can make a party award you. Its determinations are legally binding on all parties and are enforceable in court.
Contact with the TPO about a complaint needs to be made within three years of when the event(s) you are complaining about happened – or, if later within three years of when you first knew about it (or ought to have known about it). There is a discretion for those time limits to be extended.
TPO can be contacted at: 10 South Colonnade, Canary Wharf, E14 4PU Telephone: 0800 917 4487 www.pensions-ombudsman.org.uk (where you can submit an online complaint form)
Are there other continuing employer concerns?
Early ill health retirement, from a deferred pension is also an employer decision. A member who left you some time ago, could in later life develop an illness and seek early payment of the pension. This enquiry will come back to you – you will know the details of the former employment.
You will need to ensure you use the right certificate - contact Pension Services – because the questions for the medical opinion will vary a little according to the regulations.
What will an ill health retirement cost the employer?
As you will be aware early payment of an unreduced pension will involve additional employer costs. However, we do not invoice you immediately but is included in the next valuation exercise.