Ill health retirement

Active members

There are three tiers of ill health retirement for active members, summarised below. The tiers are based on the member’s likely capacity for gainful employment, which means paid work of around 30 hours a week for at least year.

If you decide that an employee can take ill health retirement, you must decide which tier of pension they will receive.

Tier 1

  • Has no reasonable prospect of being capable of gainful employment before normal pension age.
  • Will receive accrued pension plus 100% of what they could have accrued between the leaving date and normal pension age.

Tier 2

  • Unlikely to be capable of gainful employment within three years of leaving but likely to be capable of gainful employment before normal pension age.
  • Will receive accrued pension plus 25% of what they could have accrued between the leaving date and normal pension age.

Tier 3

Unlikely to be capable of gainful employment immediately but likely to be capable within 3 years of leaving.

Will receive accrued pension, payable for up to three years.

Pension will stop if:

  • member finds gainful employment
  • at the 18 month review, found capable of gainful employment

The employer must carry out a review after 18 months and inform Pensions Services of any change in the member’s circumstances.

Member can ask to be reassessed at end of 3 years to see if the pension should become a tier 2 pension.

You can ask for a pension estimate. You will have to tell us which ill health tier to calculate; the differences between the tiers can be substantial so only ask for a tier 1 or tier 2 estimate if you are sure of the outcome of the ill health assessment.

If you do not indicate a tier, we will provide a tier 3 estimate showing the accrued pension without any increases.

We can provide up to two estimates in a 12 month period free of charge. There will be a charge for extra estimates within 12 months.

Deferred members

A former employee may apply to you to have their pension paid, unreduced, on ill health grounds. You must follow the process much as you would for an active employee. The only differences are that:

  • the LGPS regulations which apply will depend on when the employee left the scheme. Please use the relevant certificate so that it refers to the relevant regulations
  • you will not need to allocate the member to one of the three tiers because pensions paid to deferred members are not enhanced
  • you will not need to send leaver information as you will have sent it in the past
Forms and guidance