Under Teacher pensions Ill-health | Life events | Working Life | Teachers’ Pensions (teacherspensions.co.uk):
There are two different levels of Ill-health benefits that can be awarded.
Accrued benefits are awarded if the member is assessed as being permanently unable to teach but can still work in another role. With accrued benefits, a member’s service won’t be enhanced.
Enhanced benefits are awarded if the member is assessed as being unable to undertake any type of gainful employment. For members in the final salary arrangements their service will be enhanced, adding half of the prospective service to their normal pension age, with the appropriate accrual rate of 1/80th (NPA60) or 1/60th (NPA65) to acquire the final enhancement. For members in the career average scheme it’s their accrued earned pension that is enhanced, based on the annual rate of pensionable earnings and half of the prospective service to their normal pension age, with the accrual rate of 1/57th to derive the final enhancement.
Where a member works part-time any enhancement will be calculated using the annual rate of pensionable earnings as if the position was full-time. Where a member works more than full-time, the full-time equivalent salary is calculated by taking account of the rate for each employer involved.
Where a member’s condition is serious and their life expectancy is severely restricted, i.e. is less than a year, their pension can be paid as a one-off lump sum of approximately five times the initial pension. The member needs to request this when making their application for ill-health retirement to ensure that the request is assessed and paid if appropriate, based on the report from the Schemes’ medical advisor. The payment of a serious ill- health one-off lump sum extinguishes the member’s right to any further pension payments from the Scheme.
Here are the steps:
- The application forms for Ill-health (to open form please click HERE) Retirement should be completed. The member should complete the application form whilst the Employer and its occupational health advisors should complete the medical evidence form (to open form, please click HERE).
(If the occupational health advisors consider that the application does not contain enough medical information to enable it to be fully considered, they must provide the applicant with the opportunity to consider if there is additional information they can provide.) - When a medical condition is severe enough to warrant Ill-health Retirement, it’s reasonable to expect that the member will have been assessed by a specialist. It will greatly help in the consideration of the medical information if this is the case and supporting evidence is provided by the specialist. No medical reports can be obtained by Teachers’ Pensions on the applicant’s behalf
- The forms should be sent to us together with any additional medical evidence that the member wants to include. If the forms are not correctly completed and signed, they will be rejected
- Applications and supporting medical evidence are considered by Medical Advisors appointed by the Secretary of State and the final decision is made by us, taking into account the Medical Advisor observations
- If there’s insufficient evidence to allow the Medical Advisor to make a fully considered recommendation, the member’s application for Ill-health Retirement won’t be accepted
- If Ill-health is granted and the member is still actively teaching, the Employer must arrange for this to cease immediately. The Employer must also arrange for its payroll team/supplier to provide details of the member’s pensionable service and salary from the date of their last submission to us, up to the last day of pensionable service.
There is also an appeal stage at page 23 of the factsheet (to open factsheet, please click HERE)
Under Local Government Pension Scheme Ill health retirement :: LGPS (lgpsmember.org):
The Employee must have met the two year vesting period in the LGPS to qualify for ill health benefits. The employer must be satisfied that:
- The Employee is permanently unable to do their job until their Normal Pension Age, and
- The Employee is not immediately capable of undertaking gainful employment.
The employer must get the opinion of an independent occupational health physician appointed by them before it makes its decision.
Gainful employment means paid employment for at least 30 hours a week for a period of at least a year.
Ill health benefits can be paid to the Employee at any age. The benefits will not be reduced because they are being paid early. In some cases, the pension will be increased to make up for early retirement. The level of benefits depends on how likely the Employee is to be capable of gainful employment after they leave.
What the Employee is paid depends on which benefit tier they qualify for. The employer decides on the appropriate tier. The benefits payable under the different tiers and the qualifying conditions are set out below.
Tier 1
The Employee qualifies for Tier 1 if they are unlikely to be capable of gainful employment before their Normal Pension Age. The ill health benefits they would receive are:
- the pension they have already built up on their date of leaving;
- no reduction for early payment;
- plus the pension they would have built up in the main section of the LGPS from their leaving date to their Normal Pension Age.
A Tier 1 pension is paid for the rest of their life. The increase to their pension under Tier 1 is based on their Assumed Pensionable Pay.
Tier 2
The Employee qualifies for Tier 2 if they are unlikely to be capable of gainful employment within three years of leaving, but they are likely to be capable of gainful employment before their Normal Pension Age. The ill health benefits they would receive are:
- the pension they have already built up on their date of leaving;
- no reduction for early payment;
- plus 25% of the pension they would have built up in the main section of the LGPS from their leaving date to their Normal Pension Age.
A Tier 2 pension is paid for the rest of their life. The increase to their pension under Tier 2 is based on their Assumed Pensionable Pay.
Tier 3
The Employee qualifies for Tier 3 if they are likely to be capable of gainful employment within three years of leaving, or before their Normal Pension Age, if this is earlier. They would receive the pension they have built up on their date of leaving. it would not be reduced for early payment. Their Tier 3 pension is paid temporarily. It will stop when the first of these events happens:
- Their Tier 3 pension has been paid for three years;
- They start gainful employment;
- They become capable of gainful employment.
If they reach the Normal Pension Age while their Tier 3 pension is being paid to them, it will not stop. The former employer must assess whether the Employee is capable of undertaking gainful employment.
After the Tier 3 pension is stopped, it will normally become payable again from their Normal Pension Age. They may take it earlier. Their pension fund will provide them with information about their options when their Tier 3 pension stops.
Assumed Pensionable Pay
Assumed Pensionable Pay is used to work out the increase to the Employee’s pension when they are awarded Tier 1 or 2 ill health benefits. Assumed Pensionable Pay is the average pay they receive in the period before they leave due to ill health retirement. It is based on three months’ pay if they are paid monthly or 12 weeks’ pay if they are not paid monthly.
There are sometimes adjustments to the calculation of Assumed Pensionable Pay:
- If the Employee’s pensionable pay was reduced because they were away from work, the Employer will generally ignore the reduction when it works out the Assumed Pensionable Pay. This will be the case if the Employee is absent because of sickness or injury, authorised unpaid leave or trade dispute.
- If the pay the Employee received in the period leading up to their leaving date is lower than the pay they would normally receive, the Employer can use a higher pay to work out the Assumed Pensionable Pay. The Employer must have regard to the pensionable pay the Employee received in the last 12 months when they do this.
The Employee may have been working reduced hours in the period leading up to their leaving date. An independent medical practitioner must certify whether they were working reduced hours because of the condition that led to their ill health retirement. If the Employer did reduce the working hours because of that condition, the Employer will work out the Assumed Pensionable Pay based on the pay the Employee would have received if their hours had not been reduced.
