Your guide to ill-health retirement
One of the benefits of being a member of an NHS (Scotland) pension scheme is that you may qualify to receive a pension if you've been employed for more than two years and you’re permanently unable to work to your normal pension age due to ill health or injury. The level of pension awarded to you in these circumstances will depend on the severity of your condition and your potential for employment in the future.
There are two levels of ill health retirement:
- Lower-tier applies if you’re permanently unable to efficiently carry out your current job due to an illness or injury
- Upper-tier applies if you’re permanently unable to carry out any regular employment of like duration because of illness or injury.
Ill health pensions are protected against inflation and are increased annually in line with the Consumer Price Index.
Understanding the difference between the lower and upper tiers
Lower-tier is the base level while upper tier is an enhanced award. In both the 1995 and the 2008 sections of the NHS Superannuation Scheme (Scotland) and the NHS Pension Scheme (Scotland) 2015, lower-tier awards are based on all your accrued service (with no reduction for early retirement) at the time the award is made.
For upper-tier awards, the enhancement that’s paid in addition to the lower-tier benefit is up to two thirds of your prospective service to normal pension age in the 1995 and 2008 Sections or up to half your prospective service to State Pension age in the 2015 Scheme.
Moving between tiers after retirement
When your case is assessed, if the scheme advisers are unsure if you’ll recover sufficiently to undertake any regular employment, you may be awarded lower-tier retirement subject to a future review. This may allow you to reapply for upper-tier benefits within three years of your original retirement, if you’re able to submit further medical evidence to support your claim.
If your claim is successful, your benefits would increase to upper-tier from the date on which the review decision was made.
If you receive upper-tier benefits and you’re subsequently able to return to employment, your benefits may be reduced to the lower-tier rate. If you return to work in the NHS and remain in employment a year later, you would also be placed in the lower-tier.
If your pension is reduced from upper-tier to lower-tier, you’re allowed one opportunity to move back to upper-tier benefits before your normal pension age if you’re once again unable to continue in that employment. You must do this within 12 months of your new employment and provide further supporting medical evidence.
Age limits for ill-health retirement
You can only apply for ill-health retirement if you’re under your normal pension age or if you’re over your normal pension age and your illness has a life expectancy of less than 12 months. Normal pension ages in the various sections are:
- 1995 Section – 60
- 2008 Section - 65
- 2015 Scheme - whichever is later of State Pension Age or 65.
Ill health retirement criteria
There are many different medical reasons that can cause someone to be permanently unable to work and each case is individually assessed. In some cases, even though your employment is terminated on the grounds of ill health, you may not necessarily qualify for ill-health retirement. For example, under the terms of your contract, it may be possible that your employer can end your employment as they require a post to be filled immediately or in the short-term. However, to qualify for ill-health retirement, you must be found to be permanently unable to efficiently carry out your employment duties.
Similarly, if you receive disability or incapacity benefits from the Department of Work and Pensions, you may not necessarily be entitled to ill-health benefits from the scheme. DWP benefits are based on your present condition while SPPA and its Medical Advisers must reach a decision on the likelihood of your condition preventing you from undertaking your NHS duties or any other employment until you reach your normal retirement age.
The ill-health retirement application procedure
If you're an active member of the scheme and have at least two years’ qualifying service, you should approach your employer to discuss whether they would support your claim for ill-health retirement.
If they do, you'll be given an Application for Ill Health Benefits form, which you'll need to complete with your employer. This form must then be submitted to SPPA accompanied with a Medical Report form, completed by Occupational Health, and any supporting medical evidence, such as GP and consultant reports.
If Occupational Health will not support your application and complete the Medical Report form this can be completed by a GP or specialist clinician. A completed Application for Ill Health Benefits form along with additional information required by our medical advisers (such as job description, sickness absence records) must be sent to us through your employer.
Once all information is received it will be forwarded to our medical advisers who are an independent body specialising in occupational health. Their objective assessment is based on the evidence provided with your application so it’s vital to submit as much relevant evidence as possible when you apply.
If, for any reason, you don’t agree with the decision our medical advisers make on your case, or if you have any grounds for a complaint, you should ask us to review your application under the Internal Dispute Resolution Procedures.
In cases of financial hardship, you have the option to apply for your pension on a Voluntary Early Retirement with Actuarial Reduction basis provided you've reached your minimum retirement age (50 for 1995 Section and 55 for 2008 Section and 2015 Scheme). Once we've received your request in writing we'll pay your reduced pension in the interim period until a decision on your appeal has been made. If your appeal is successful your pension and lump sum will be revised and arrears paid. If not your pension will continue to be paid on a voluntary early retirement basis.
Ill-health retirement for deferred members
If you’re a former scheme member with preserved benefits and you become too ill to undertake any employment, you may qualify for early retirement on a preserved pension. This would allow you to receive your benefits immediately. In these cases there’s no reduction for early retirement but there’s also no enhancement added to your service.
You should complete the Application for early payment of preserved pension benefits form and have a Medical Report (Preserved) form completed by either a GP, a specialist, an occupational health doctor or senior occupational health nurse, providing copies of any additional reports relating to your medical condition.
Returning to work
If you’re awarded ill-health retirement but then return to NHS employment prior to your 50th birthday, you’ll be eligible to re-join the pension scheme.
Your benefits may be reduced if you take up further employment. This is known as ‘abatement’. It only affects a certain portion of the pension and the reduction only applies until you reach your normal retirement age.
Terminal illness benefits
If you’re terminally ill with a life expectancy of less than a year, it’s possible for you to convert all your ill-health benefits into a one-off, tax-free lump sum payment. There’s a section on the application form where you can advise us if you wish to take this option. Your application will be fast-tracked and a decision will normally be made within 24 hours of receipt.
The one-off payment is also an option if you’re over the scheme’s normal retirement age and are applying on age grounds or if your benefits within the scheme are preserved. Your application should be submitted with confirmation from your GP or Consultant that your life expectancy is less than twelve months along with the nature of your condition.