If an employee leaves work due to illness, they may be able to receive immediate payment of their benefits on the grounds of Ill health.
Ill health eligibility rules
- the employee must have met the 2 years vesting period in the scheme.
- the employee is not immediately capable of undertaking any gainful employment.
- the employer must be satisfied that the employee is permanently unable to do their current employment job until their State Pension Age. The employer must terminate the employment on these grounds.
'Gainful employment' means paid employment for not less than 30 hours in each week for a period of not less than 12 months.
The employer must base their decision on the opinion from an IRMP.
If the employee satisfies the above criteria, then an Ill health pension is payable. The tiers of benefit are based on the likelihood of the employee being capable of gainful employment after they leave.
Tiers of Ill health retirement
Tier 1 - if the member is unlikely to be capable of undertaking any gainful employment before their Normal Pension Age. Tier 1 Ill health benefits are based on the pension they have already built up at their date of leaving the scheme, plus the pension they would have built up, calculated on assumed pensionable pay (APP) had they been in the main section of the scheme until they reached their Normal Pension Age.
Tier 2 - if the member is unlikely to be capable of undertaking any gainful employment within 3 years of leaving, but are likely to be capable of undertaking such employment before their Normal Pension Age. Tier 2 Ill health benefits are based on the pension they have already built up at their date of leaving the scheme, plus 25% of the pension they would have built up calculated on assumed pensionable pay (APP), had they been in the main section of the scheme until they reached their Normal Pension Age.
Tier 3 - if the member is likely to be capable of undertaking any gainful employment within 3 years of leaving, or before their Normal Pension Age (if earlier). Tier 3 Ill health benefits are based on the pension they have already built up at their date of leaving. Payment of these benefits will be reviewed after 18 months and stopped after 3 years, or earlier if they are in gainful employment or become capable of such employment, provided they have not reached their Normal Pension Age by then. If the payment is stopped it will normally become payable again from their Normal Pension Age but there are provisions to allow it to be paid earlier. Details would be provided at the time.
Tier 3 Ill health retirement must be reviewed after 18 months.
Find out about Tier 3 Ill health retirement 18 month review.
Independent Registered Medical Practitioner (IRMP) opinion
Before you decide to terminate the employee’s employment on the grounds of permanent ill health, LGPS Regulation 35 requires you to obtain an Ill Health Certificate from an IRMP, qualified in occupational health medicine, as to whether:
- in their opinion the member is suffering from a condition that renders them permanently incapable of discharging efficiently the duties of the relevant employment because of ill health or infirmity of mind or body and, if so
- as a result of that condition has a reduced likelihood of being capable of undertaking any gainful employment before reaching their normal pension age.
Find out about appointing an Independent Registered Medical Practitioner (IRMP)
Ill health medical certificate
Once the IRMP has made their medical opinion, they should complete the LGPS 17A - Ill Health Certificate for a Current Employee (DOCX, 49.55KB) and return this to you.
You should look at this certificate, along with any other supporting information and use this to make your decision on pension entitlement. This includes determining which tier of ill health award the employee is entitled to.
An Employer cannot agree or decline any ill health request without seeing a certificate from an IRMP first.
Your decision and responsibilities
It is your responsibility to decide whether to award ill health retirement benefits or not, after obtaining the opinion of an Independent Registered Medical Practitioner (IRMP) approved by the Fund. You must notify the member accordingly in a letter containing:
- Employer decision (whether an Ill health benefit is to be awarded or not)
- Inform the member that the employer decision has been made with reference to the IRMP’s opinion.
- If a benefit has been awarded, the tier of Ill health benefit.
- If a Tier 3 benefit is granted, it must mention that it is a temporary benefit and that there is a review at 18 months.
- If a decision of no award has been made, then the reasons of this decision should be included. The employer should explain why the member has not met the conditions outlined in the regulations.
- Information on how the member can appeal the decision must also be included, via the Internal Disputes Resolution Procedure (IDRP) process. This should include the timescales for making an appeal and the contact details of the employer's appointed person for appeal.
You can use the following Ill health template letters to tell an employee your decision.
What you need to tell us
If you have made the decision to award ill health retirement, you must tell the Fund by uploading the following documents to the i-Connect member record.
- Leaver form for Ill health retirement.
- LGPS 17A – Ill Health Certificate for a Current Employee completed by IRMP.
Ill health retirement leaver form
Find out about how to upload documents using i-Connect
Statutory guidance
2013 Regulation 36(4) makes it a requirement that both employers and independent registered medical practitioners have regard to statutory guidance when carrying out their functions.
The latest guidance is dated September 2014 and is accompanied by FAQs dated June 2015. Both documents are available under ‘Statutory guidance relating to the LGPS Regulations 2013’ section of the LGPS Regulations 2013 page. https://www.lgpsregs.org/schemeregs/lgpsregs2013.php