Sickness absence - ill health retirement
• Where the decision has been made to dismiss on the grounds of sickness absence due to ill health, an employee who is a member of the pension scheme may be entitled to take their pension early.
• Occupational Health Services will advise on whether, in their opinion, an employee meets the requirements of the Local Government Pension Scheme (LGPS) Regulations for early retirement on the grounds of ill health.
• Occupational Health Services will also make an assessment on whether, in their opinion, the employee falls into Tier 1, Tier 2 or Tier 3 as listed below.
• Under the Internal Dispute Resolution Procedure, as set out in the LGPS Regulations, a member has a right to appeal against the decision on the matter of meeting the requirements for early retirement on the grounds of ill health and also on which tier is applied to their pension.
• Employees will be entitled to be paid their contractual pay for the duration of their notice period regardless of whether the employee’s entitlement to sick pay has expired.
16.4.1 The Local Government Pension Scheme (LGPS) Regulations 2013
The Local Government Pension Scheme Regulations 2013 contain a three tier ill health retirement benefit package. Provided the employee has at least two years membership and their employment is terminated because of permanent ill health, they will receive:
Tier 1
If they have no reasonable prospect of being capable of undertaking any gainful employment before they reach normal pension age.
They will receive a pension, based on the membership as if they remained in the scheme up to normal pension age.
Tier 2
If they are likely to be capable of undertaking any gainful employment before they reach normal pension age but not within three years.
They will receive a pension based on their accrued membership, plus 25% of the membership as if they remained in the scheme up to normal pension age (i.e. 25% from their last day of service to normal pension age).
Tier 3
If there is reasonable prospect that they will be capable of undertaking any gainful employment within three years
They will receive a pension based on their accrued membership. The pension payable is not enhanced and will only be paid until such time as the member undertakes gainful employment or up to the maximum of three years.
If the member has not found gainful employment after 18 months, the employer will be able to seek further opinion from THE COUNCIL’S OCCUPATIONAL HEALTH SERVICE on:
• Whether they remain capable of undertaking gainful employment within three years. (The employer has the power to stop further payments in this scenario), or
• Whether they are incapable of undertaking gainful employment within three years but are likely to be able to undertake gainful employment before normal pension age. (The employer has the power to enhance payments to the level of the 2nd tier in this scenario).
‘Gainful employment’ is defined as “paid employment for not less than 30 hours in each week for a period of not less than 12 months”. It does not have to be employment that is commensurate in terms of pay and conditions with that of the person’s current employment.
‘Normal pension age’ means the employee’s individual State pension age at the time the employment is to be terminated, but with a minimum of age 65. For a full breakdown of individual State pension ages please see http://www.pensionsadvisoryservice.org.uk/state-pensions/know-your-state-pension-age
There is to be an underpin for those who were members of the LGPS on 31st March 2008 and were aged 45 or over so that they receive no less than they would have done under the 1997 LGPS Regulations.
There will also be a protection for those members who have a reduction in hours which directly relate to the ill health condition resulting in termination of employment.
The above information is for guidance purposes only and no decision regarding pension benefits should be made on the basis of this information