Ill-health retirement
An ill-health retirement allows you to retire before your normal pension age due to ill-health. Your employer must firstly decide whether you meet the rules for an ill-health pension before you can go down the ill-health retirement process.
It's only possible to receive an ill-health pension if you're dismissed from your job because of your health. If you choose to voluntarily leave your job, you don't qualify for an ill-health pension.
Please note
Shropshire County Pension Fund will potentially not be able to provide you with a quote on your ill health retirement benefits before your employer has referred you to one of the Fund’s Independent Registered Medical Practitioners (IRMP’s).
The opinion of the IRMP is crucial in determining if you are capable of permanently performing your job due to ill health and what level of ill health pension you may be awarded.
For further information, please read the “What benefits could I get” section below.
Rules you must meet
If you've been in the scheme for two years, you could get an ill-health pension. If you're dismissed from your job because of ill-health, your employer will decide if you meet the following rules for an ill-health pension:
- As a result of ill-health or infirmity of mind or body, you are permanently incapable of discharging efficiently the duties of the employment you were engaged in
- As a result of ill-health or infirmity of mind or body, you are not immediately capable of undertaking any gainful employment.
Your employer's decision is based on a report from an independent registered medical practitioner (IRMP).
What benefits could I get?
The amount of retirement pension you could get if you meet the above rules is set by which of the three benefit tiers apply to you. The decision about which tier you meet is made by your employer after they've had an medical opinion from an IRMP.
The three tiers are:
Tier 1
If you've no reasonable prospect of being capable of obtaining gainful employment before normal pension age, ill-health benefits are based on the membership you would've had if you'd stayed in the scheme until normal pension age.
Tier 2
If you're unlikely to be capable of obtaining gainful employment within three years of leaving, but you may be capable of doing so before normal pension age, then ill-health benefits are based on your membership built up to leaving plus 25% of your prospective membership from leaving to normal pension age.
Tier 3
If you're likely to be capable of obtaining gainful employment within three years of leaving, or before normal pension age if earlier, ill-health benefits are based on your membership at leaving. Payment of these benefits will be stopped after three years, or earlier if you are in gainful employment or become capable of getting such employment.
If you are awarded tier 3 benefits you must tell your previous employer when a new employment is found giving them details, including pay and working hours. The employer would then stop payments if this was ‘gainful employment’.
A review is undertaken by your former employer after 18 months of a tier 3 benefit being in payment and stopped if gainful employment has been found.
What does 'gainful employment' mean?
Gainful employment means paid employment for no less than 30 hours a week for a period of no less than 12 months.
If you're part-time, any extra membership awarded due to ill-health retirement will be reduced to reflect your part-time hours at leaving.
Any reduction in hours due to your illness wouldn't be considered.
Assumed Pensionable Pay
Assumed Pensionable Pay is used to work out the increase to your pension when you are awarded Tier 1 or 2 ill-health benefits.
Assumed Pensionable Pay is the average pay you receive in the period before you leave due to ill-health retirement. It is based on three months’ pay if you are paid monthly or 12 weeks’ pay if you are not paid monthly.
There are sometimes adjustments to the calculation of Assumed Pensionable Pay:
- If your pensionable pay was reduced because you were away from work, your employer will generally ignore the reduction when it works out your Assumed Pensionable Pay. This will be the case if you are absent because of sickness or injury, authorised unpaid leave or a trade dispute.
- If the pay you received in the period leading up to your leaving date is lower than the pay you would normally receive, your employer can use a higher pay to work out your Assumed Pensionable Pay. Your employer must have regard to the pensionable pay you received in the last 12 months when they do this.
- You may have been working reduced hours in the period leading up to your leaving date. An independent medical practitioner must certify whether you were working reduced hours because of the condition that led to your ill health retirement. If you did reduce your working hours because of that condition, your employer will work out your Assumed Pensionable Pay based on the pay you would have received if your hours had not been reduced.
What happens when my tier 3 ill-health pension is stopped?
If after the 18 months review, after the three years of Tier 3 ill-health pension payments, or earlier if you are in gainful employment, you become a ‘deferred pensioner member’ from the date your benefits are stopped.
This doesn’t mean you become a ‘deferred member’ and have the rights associated with that such as transferring out of the scheme or amalgamating membership. You’ll still be classed as a pensioner whose pension is deferred and payable again at normal pension age.
You can still choose to get your reduced benefits from age 55 and have the rule of 85 applied.
Please see the early retirement page for more information about leaving the scheme early and the reductions applied to your pension.
