Ill-health retirement

If a medical assessment finds you permanently unable to do your job, you can take your public sector pension early without the usual reduction. In the bigger schemes the benefit comes in tiers. A lower tier pays the pension you have already built up, unreduced. A higher tier, for people who cannot do any regular work, adds extra pension to make up for some of the years you would have worked.

Who can apply

You usually need to be an active member of the scheme, still employed, when you apply, and to have been a member for a minimum period set by your scheme. Deferred members (people who have left) can apply in most schemes for early payment on ill-health grounds, though the benefit is normally limited to the pension already built up.

The test is permanence. The scheme asks whether your condition will stop you doing your job, or any regular work, until your normal pension age. A condition that may improve with treatment, or one where reasonable adjustments would let you carry on, usually does not qualify. Schemes therefore look closely at what treatment you have had and what adjustments your employer has tried.

The tiers in each scheme

Scheme	Lower tier	Higher tier
NHS Pension Scheme (England and Wales)	Tier 1: unable to do your NHS job. Pension built up so far, unreduced	Tier 2: also unable to do any regular employment. Adds an enhancement for future service
Teachers’ Pension Scheme	Partial incapacity: unable to teach. Pension built up, unreduced	Total incapacity: unable to do any work. Enhanced pension
Local Government Pension Scheme	Tier 3: permanently unable to do your job but likely to find some gainful work within a few years. Pension built up so far, paid for a limited period	Tier 1: no reasonable prospect of gainful employment before pension age. Full enhancement. Tier 2 sits between them with a partial enhancement
Civil Service alpha	Lower tier: unable to do your job	Upper tier: unable to do any work. Extra pension added

Each scheme’s rules set the size of any enhancement, and it depends on how far you are from normal pension age and on your pay. The scheme administrator can give you an estimate before you apply.

Each scheme also has rules for terminal illness. If your life expectancy is short, you may be able to take your whole pension as a tax-free lump sum instead of a yearly pension. Ask the administrator about this as early as you can, because the timing affects what can be paid.

How the process works

In the NHS, teachers’ and Civil Service schemes, the application goes to the scheme, and the scheme’s own medical advisers decide. You fill in your part and your employer fills in theirs (job details, sickness record and adjustments tried). Medical evidence goes with it, usually from occupational health, your GP and any specialist.

The LGPS works differently. Your employer makes the decision, but only after taking a certificate from an independent registered medical practitioner. The doctor has to be one the employer has appointed for this purpose and who has not already treated you for the condition.

Expect it to take time, sometimes many months, while reports are gathered. Your contractual sick pay may run out in the meantime. The NHS sick pay, teacher sick pay and council sick pay guides set out how long full and half pay last.

Medical evidence that helps

The scheme judges permanence against your job description, so give it the real duties of your role rather than a general job title. Evidence from specialists who have treated you over time usually carries more weight than a single short letter. Keep records of treatments you have tried and why they did not work, because a decision-maker will ask whether further treatment could make you fit to work.

If your employer has tried reasonable adjustments, such as reduced hours, a different role or equipment, include what was tried and what happened. The Equality Act 2010 places a duty on employers to make reasonable adjustments for disabled staff, and that duty runs alongside the pension process.

Ill-health retirement and dismissal

If you are found eligible, your employment ends on grounds of ill health and the pension starts. If you are refused, you are still employed, and your employer may move to a capability process that can end in dismissal without an ill-health pension. The order of events therefore matters. Ask HR or your union about timing before any capability hearing goes ahead, and try to get the pension application decided first.

Dismissal does not automatically stop an ill-health application already under way, but rules differ between schemes. Check before agreeing any end date.

If you are turned down

All of these schemes have an appeal route. It usually starts with an internal dispute resolution procedure, where the decision is looked at again, often with fresh medical advice. New evidence, such as a specialist report you did not have before, can change the outcome. If you are still unhappy after the internal stages, The Pensions Ombudsman can look at whether the scheme followed its rules and considered the evidence properly.

A union representative can help with the paperwork and appeals. If your health makes the process hard, ask your employer and the scheme whether a family member or representative can deal with them for you.

Reviews after you retire

Higher-tier pensions in some schemes can be reviewed. The LGPS tier 3 benefit is temporary by design: it stops after a set period, and you can ask for a review and an upgrade if your health has got worse. In the Teachers’ Pension Scheme, going back to work after a total incapacity award can lead to a review of the enhanced part of the pension.

Tell the scheme first if you are thinking of starting work again after ill-health retirement. Overpayments are usually reclaimed, and repaying them in one lump can hurt. The scheme can tell you what you are allowed to earn without affecting your pension.