At a Glance
✓ Ill-health benefits can be paid at any age if you meet the eligibility criteria.
✓ Your employer must obtain an opinion from an independent occupational health doctor.
✓ Your pension may be enhanced depending on your ability to return to work.
✓ You have the right to appeal if you disagree with your employer's decision.
If you have at least 2 years' LGPS membership (or have transferred previous pension rights into the scheme) and your employment is terminated by your employer on ill-health grounds, you may be entitled to receive your pension immediately without any reduction for early payment.
Ill-health benefits can be paid at any age and, in some cases, your pension may be enhanced depending on your medical circumstances and your ability to return to work.
How is ill health assessed?
Your employer must obtain an opinion from an Independent Registered Medical Practitioner (IRMP) who is qualified in occupational health medicine.
Your employer must be satisfied that you are:
- Permanently incapable of carrying out your current job; and
- Not immediately capable of undertaking gainful employment (30 hours or more per week for at least 12 months).
"Permanently incapable" means until your Normal Pension Age (NPA).
What is the process?
If your employment ends because of ill health, the process will normally involve the following steps:
What benefits could I receive?
| Tier | Assessment | Benefits |
|---|---|---|
| Tier 1 | Unlikely to return to gainful employment before your NPA. | Full enhancement to your NPA. |
| Tier 2 | Unlikely to return to gainful employment within 3 years, but likely before your NPA. | 25% of the enhancement awarded under Tier 1. |
| Tier 3 | Likely to return to gainful employment within 3 years. | Accrued benefits only, with no additional enhancement. |
Tier 3 pension is not payable for life. It will cease if you enter gainful employment or after a maximum of 3 years.
What happens if I receive a Tier 3 pension?
Tier 1 and Tier 2 pensions are payable for life and are not subject to review.
Your employer will normally review a Tier 3 pension after 18 months. Your benefits may be upgraded to Tier 2 if your condition worsens, or payments may stop if your condition improves.
What if I do not qualify?
If you are not awarded an ill-health pension, your benefits will normally become deferred benefits.
You can receive those benefits at your Normal Pension Age or take them earlier from age 55 (57 from 6 April 2028), usually subject to an actuarial reduction.
Can I appeal?
If you disagree with your employer's decision, you may appeal through the Internal Dispute Resolution Procedure (IDRP).
Any appeal should be submitted in writing within 6 months of the date of the decision.
Are there any tax implications?
In some cases, a Tier 1 or Tier 2 ill-health pension may significantly increase the value of your pension benefits.
If this applies, Gwynedd Pension Fund will contact you with information regarding the Annual Allowance and any potential tax implications.
Can I take part of my pension as a lump sum?
When you take your pension, you can normally exchange part of your annual pension for a one-off tax-free lump sum.
Commuting pension will increase the lump sum you receive at retirement, but it will reduce the annual pension paid to you for the rest of your life.