If you have to leave work due to illness, you may be able to receive immediate payment of your benefits.
To qualify for ill health benefits, you will have to have met the two years vesting period in the scheme and your employer must be satisfied that you will be permanently unable to do your own job, with advice from an independent occupational health physician.
Ill health benefits can be paid at any age and are not reduced on account of early payment. In fact, your benefits could be increased to make up for your involuntary early retirement. There are graded levels of benefits, called ‘Tiers’. Each is based on how able you are to return to gainful employment in the future.
Please note that the enhanced ill health pension would be less than the figures quoted at Normal Retirement Date on your Annual Benefit Statement. This is because the figures on the statement include late retirement increases to the pre April 2014 membership (if applicable) which do not apply for the enhanced ill health pension.
Gainful employment means paid employment for no less than 30 hours a week, for a period of 12 months minimum.
The graded levels of benefit are:
You are graded Tier 1 if you’re not capable of gainful employment before your Normal Pension Age due to ill health, your benefits are based on the pension you have already built up, plus the pension you would have built up if you had continued to work. This is calculated on assumed pensionable pay, based on if you had been in the main section of the scheme until you reached your Normal Pension Age.
You are graded Tier 2 if you’re not capable of gainful employment within 3 years of leaving work due to ill health but are likely to return to similar employment before you reach Normal Pension Age. Your ill health benefits are based on the pension you have already built up, plus 25% of the pension you would have built up had you been in the main section of the scheme until you reached your Normal Pension Age. This would be calculated on assumed pensionable pay.
You are graded Tier 3 if you’re capable of gainful employment within 3 years of leaving work due to ill health or before your Normal Pension Age. In this instance, your ill health benefits are based on the pension you have built up at the point of leaving.
Payment of these benefits will be stopped after 3 years, or sooner if you’re in gainful employment or are capable of employment again. This would be if you have not reached your Normal Pension Age by that time.
If the payment is stopped, it will normally become payable again once you reach Normal Pension Age, but there are provisions to allow it to be paid earlier. You can find out more information about this by contact Peninsula Pensions directly.
If you would like to know more information regarding ill health retirement, benefit gradings or assumed pensionable pay, then please visit the LGPS website.