Pension help please

stef240377

My other half has worked for County Council for 7.5years. During the last year has been on long term sick due to a medical problem. His terms of contract and final day of employment ceased yesterday as this was exactly a year since he became incapable to work. Head of HR Dept has said that they will attempt to keep position available until he is either fit for work or it is no longer possible for them to keep it vacant.

As we are now on benefits with me being his carer and OH awaiting a clinical drug trial for his condition, work have given him the option of having his 7.5yrs pension contributions converted into 7.5 monthly payments of the equivalent of his full monthly wage. OH has not heard of anyone else from work being given this option before and is scepticle about what it entails.

In short will this mean when he reaches retirement age (he is currently 29) he no longer has a pension if he accepts this offer and if it is taken up will it affect any benefits we are now receiving after a six month slog at arguing his medical condition and ability to work due to reduced mobility to get them.. Not sure if it is of any help but his condition is anklyosing spondylitis and recurrent bouts of chostochondroitis

Dithering_Dad

I've never heard of pensions being doled out in this way, it seems to go against all of the rules (not being able to take more than 25% out of pension and not having access to pension until age 55) but hopefully the more knowledgeable guys will be along with a bit more information for you.

As far as your benefits are concerned, then the means tested ones will be reduced if your income increases.

If you can afford to do without this money right now, then I'd be tempted to leave the pension alone as it will continue to grow over the next 39 years until state retirement age.

jonathon_hart

Its a new one on me as well, however just checked the rules on this: http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM08100070.htm

According to this the pension may be stopped at any time - although the inference is that the HMRC excepts this rule to be used if the person recovers from whatever caused the ill health retirement.

So it looks a little grey but not explicitly against the rules, as they are essentially offering him a very high level of pension and then stopping the pension.

The question would be as to whether your husband is better off with that arrangement, a lower lifetime payment (if the council are offering that) or waiting until the pension can be taken normally.

Jonathon

stef240377

Thank you any help no matter how small it is, is still gratefully received. I just dont want OH accepting this offer from work to find out his future income could be in jeopardy.

Retired_I.F.A.

I'm not sure but when a scheme offers immediate benefits on ill health gounds they can be pretty much in any form, this I presume is just one that the schemes actuary has come up with. I strongly suggest you seek out an IFA asap and with his help negotiate on other options as the main problem you face is the fact DD points out, any means tested benefits will be reduced by the pension income.
Getting a transfer value hopefully enhanced because of the ill health and placing it into a PP would be my choice but maybe theres a better offer possible.

EdInvestor

In the first instance OH should ask for more information about the terms of this offer and should then go and see his union representative for further help.

stef240377

With the current levels of medication OH is on he gets confused easily so asking for further information at the time would have overloaded him. As i am not a Union rep or anything else in a legal stance were not allowed to attend the meeting with him. Our understanding from work was that the meeting was purely to get an update on his medical situation to keep HR updated incase there is need for alterations in the workplace required for his said return not at any point was 'an offer' suggested prior to the meeting otherwise a Union rep would have been present.

MikeJones_2

Hi stef240377,

A brief background to ill health benefits
Some pension schemes provide ill-health benefits for active members before Normal Retirement Age but the benefits can vary greatly. It depends upon the Scheme Rules and the current policy of the Scheme Trustees/Employer in dealing with this situation.

Alternatively, the employer (rather than the pension scheme) may have taken out an insurance policy to cover employees that suffer ill-health. The insurance company would pay benefits to the employer who could maintain the employees membership in the scheme and/or pay part or all of the employees earnings up to normal retirement age.

Many pension schemes provide no ill-health benefit so if an employee suffers poor health, he/she may need to seek advice on how to access the pension benefit through other means.

Your situation

From what you have posted so far, it appears that your partner has been offered a pension based upon ill health terms rather than from an insurance arrangement. As commented by a previous respondant to this thread, HMRC rules now state that an ill health pension may be withdrawn under certain circumstances (it would need to be a provision contained within the Scheme Rules).

Ill health pension/benefits form the largest single reason for employee/scheme member complaints against occupational pension schemes. This tells you that they are not as straightforward as may first appear.

Get Advice

As with others commenting on this thread, I am unfamiliar with the option that your partner has been offered and concur that you really ought to seek the advice of an IFA and preferably one that specialises in ill health benefits and occupational pension schemes. An IFA will see you both (you and your partner) which will overcome some of the concerns that you have about you not being able to represent your partner with the employer.

And, as importantly, an IFA should also factor-in any tax issues and state benefit/income credit issues which you may be aware of (any probably some that you are not).

Whatever happens, always ask for everything to be put in writing.

I hope your partner's condition improves. You are to be praised in your obvious support of your partner too, something that is often overlooked.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser.

Pixieboy

Hello,

Firstly, which scheme is your OH a member of?
If it is the Local Government Pension Scheme then, although the ill health provisions have changed quite drastically from 1st April 2008, I don't recognise the offer that appears to have been made. Has your OH been referred to the approved Independent Doctor for a decision relating to his pension entitlement, i.e. whether he is permanently incapable of carrying out his job and any available comparable employment with the employer, and whether he has a reduced likelihood of obtaining gainful employment, and if so when it may be possible for him to be capable of gainful employment.
Gainful employment in this context means employment for at least 30 hours each week for at least 12 months. Permanently incapable means until at least the age of 65.
If he has seen the Independent Doctor and is not judged as being permanently incapable of carrying out his job, then, with 7.5 years membership and being 29, his only entitlement would be to preserved benefits or a transfer to another pension arrangement. There would be no immediate entitlement to benefits of any description.
Sorry this is a bit rambly, but I'm cooking dinner at the same time...
Confirmation of the Pension Scheme that applies and a bit more background on the process that he has been through with his employer's occupational health and the independent doctor who would inform the employer's pension decision would be helpful.
The new LGPS ill health provisions are a bit of a nightmare to be honest...

stef240377

Thanks Pixieboy, from what other half believes it is Local Government Scheme. Upto now he has not seen a Doctor through work they have just referred any details of his condition to the Consultant at the hospital and gone from what he says. His medical condition is different from person to person and it is believed that once he has found a medication that suits him it will settle down so he can return to some form of work, however the likelyhood of returning to original position maybe to physically demanding as he was employed as a groundsman/gardener/driver. HR have said they will attempt to find a position within the company perhaps something more office based but as of yet we have never received anything in writting. The offer for the pension was only verbal aswell hence us wanting to get a bigger picture before receiving anything in writing as OH doesnt want to enter into anything that could be detremental to the future.


Having just returned from solicitors from an unrelated matter have mention what work have said regarding monthly payments under the ill health scheme and he has advised against it purely because what may seem a good idea now at getting payments of around a thousand pound a month could mean he loses out in the long term as he could possibly be entitled to more at pensionable age. Many thanks though to all who have taken time out to contribute and help us see things in a clearer light.