A guide to ill-health retirement (IHR)

Some workplace pension schemes provide early access to your pension if you are unable to work long term due to ill health. If this is the case for you, your employer will need to seek advice from an occupational health physician (OHP) as to whether the necessary criteria set out by the pension scheme are met, and to proceed with the ill health retirement (IHR) process. 

Scheme criteria vary, but in most cases, your employer and the pension scheme will need to be satisfied that you are no longer capable of undertaking your job until your normal pension age.  Many have a further requirement that, at least temporarily, you would also not be capable of carrying out any ‘gainful employment’*.  This could be any job, in any organisation, and does not take into account your training or experience. 

*Gainful employment means at least 30 hour per week for a period of at least 1 year. 

As IHR provision is usually only available in public sector pension schemes, employees are normally under the care of occupational health prior to the request for IHR assessment. However, if it has been a while since you have been seen by an occupational health clinician then you may be reviewed by an OHP first, prior to your case being passed to an OHP who has not been involved in your case for the final assessment process. There will usually at this stage be a requirement to seek additional medical information from either your GP or a specialist doctor looking after your condition.  

The IHR assessment process is a paper exercise and will not require you to attend any form of consultation. It involves the independent OHP reviewing all the relevant evidence including any previous clinical notes and reports written by the occupational health nurse or physician, along with any requested information from your GP or specialist consultant. 

After reviewing the available medical evidence, a report and certificate will be produced for your employer and the pension authority. 

Consent

The report produced by the OHP for the purposes of IHR is likely to contain medical details to justify the decision that has been made.  You have the right to view this report prior to it being passed on to your employer and the pension authority.  You also have the right to request correction of any factual errors and the right to refuse the report to be released.  Please note that if consent to release the report is refused, then neither the report nor the certificate will be released to the pension authority, and the case will be passed back to your employer to resolve. 

Local Government Pension Scheme (LGPS) 

In the local government pension scheme, there are three ‘tiers’ depending on your longer-term likelihood to return to any ‘gainful employment’:  

Tier 1 – in this case the evidence indicates it is unlikely that you will be capable of gainful employment before your normal pension age. 

This will enable you to claim the pension you have already built up without any reduction for early payment, plus the pension you would have built up from the leaving date to your normal pension age. 

It is payable for the rest of your life. 

Tier 2 - in this case the evidence indicates it is unlikely that you will be capable of gainful employment within 3 years of leaving, but you are likely to be capable of gainful employment at some point after that and before your normal pension age. 

This will enable you to claim the pension you have already built up without any reduction for early payment, plus 25% of the pension you would have built up from the leaving date to your normal pension age. 

It is payable for the rest of your life. 

Tier 3 – in this case the OHP believes you are likely to be capable of gainful employment within three years of leaving, or before your normal pension age, if earlier. 

This will enable you to claim the pension you have already built up without any reduction for early payment. The pension is paid temporarily and will stop if: 

• You pension has been paid for 3 years. 

• You start gainful employment. 

• You become capable of gainful employment.  

A review of your case after 18 months is typically required. 

You should ensure that you speak with your employer’s pension officer and/or your pension provider or a financial advisor about the specific benefits of the scheme in which you are enrolled at an early stage, and ideally prior to entering the IHR process. 

Want to find out more about ill-health retirement? View our ill-health retirement webinar here.