Ill health retirement | Oxfordshire County Council

Ill health retirement

What employers need to do in the case of Ill health retirement.

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.

A key point is that this decision is with the employer, having sought the opinion of the IRMP.

The set of ill health certificates are on www.oxfordshire.gov.uk/employerforms    

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:

Tier 1

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.

Tier 2

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'. 

Tier 3

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:

  1. The employer must ensure they have an Independent Registered Medical Practitioner (IRMP) approved by the Pension Services Manager.
  2. 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.
  3. 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.
  4. The employer must decide if the member is entitled to an ill health pension and if so, which tier this will be based on.
  5. 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

Last reviewed
16 May 2017
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