LGPS ill health retirement

madeye25

I have some queries on LGPS ill health retirement, I have searched and read multiple threads on this forum but I am hoping someone else has had a similar experience and can give some advice.

My partner has been off sick from work since April 2024 with Severe Aplastic Anaemia, a rare and complicated condition treatable by stem cell transplant.  She has been through the mill but is finally on the right track to slow, gradual recovery.

She has a deferred LGPS pension with Durham County Council, she started the application for ill health retirement in Sept 24, has had the IRMP recently which has stated she is "unlikely to be capable of undertaking (3) gainful employment (4) before reaching 

normal pension age (5), or for at least three years, whichever is the sooner. " and she has longer than 2 years vesting period in LGPS, that scheme she was a member for about 4 years.

Therefore it seems like she will be entitled to her deferred pension benefits which should be approved.  I understand that there won't be any enhancement or Tier consideration as it is a deferred value.

Q1. Is there any chance that her application won't be approved?

She would like to maximise the value of her benefits now.  

Q2. I believe she will be able to select a lump sum, which will reduce her pension entitlement, is this completely tax free? It won't be a huge value - maybe £8K - £12K.

Q3. As an alternative way to maximise value of benefits now - is it possible to transfer the whole deferred benefit to CETV and have the whole value in cash?

My partners current employment is with a different local authority, also with an LGPS scheme.  She has worked there nearly 3 years now.

Q4. Given that an IRMP has assessed her as mentioned above, will she need another IRMP assessment, and is it possible for it to be different?

This is an important consideration as the way the Certificate reads, she may well qualify for Tier 2 benefits, which does include an enhancement.


Any support would be greatly appreciated.

Marcon

madeye25 said:

I have some queries on LGPS ill health retirement, I have searched and read multiple threads on this forum but I am hoping someone else has had a similar experience and can give some advice.

My partner has been off sick from work since April 2024 with Severe Aplastic Anaemia, a rare and complicated condition treatable by stem cell transplant.  She has been through the mill but is finally on the right track to slow, gradual recovery.

She has a deferred LGPS pension with Durham County Council, she started the application for ill health retirement in Sept 24, has had the IRMP recently which has stated she is "unlikely to be capable of undertaking (3) gainful employment (4) before reaching 

normal pension age (5), or for at least three years, whichever is the sooner. " and she has longer than 2 years vesting period in LGPS, that scheme she was a member for about 4 years.

Therefore it seems like she will be entitled to her deferred pension benefits which should be approved.  I understand that there won't be any enhancement or Tier consideration as it is a deferred value.

Q1. Is there any chance that her application won't be approved?

She would like to maximise the value of her benefits now.  

Q2. I believe she will be able to select a lump sum, which will reduce her pension entitlement, is this completely tax free? It won't be a huge value - maybe £8K - £12K.

Q3. As an alternative way to maximise value of benefits now - is it possible to transfer the whole deferred benefit to CETV and have the whole value in cash?

My partners current employment is with a different local authority, also with an LGPS scheme.  She has worked there nearly 3 years now.

Q4. Given that an IRMP has assessed her as mentioned above, will she need another IRMP assessment, and is it possible for it to be different?

This is an important consideration as the way the Certificate reads, she may well qualify for Tier 2 benefits, which does include an enhancement.


Any support would be greatly appreciated.

Sounds as if you've both been through the mill in recent years. 

Is she trying to get ill health retirement in respect of her deferred LGPS pension, while continuing to build up benefits in her current (active) LGPS pension?

Silvertabby

My sympathies to you both.  As Marcon says, you've both been through the wringer.

How old is your partner?  I realise that your first instinct would be to ask why that factor is relevant, but it can be.  With Ill Health retirement - both deferred and current service - the Occ Health Dr has to confirm that the applicant is unlikely to be capable of undertaking gainful employment etc.  And the younger she is, the less likely the Dr will be to commit to this if there is any chance that your partner's health will improve over the next few years.

madeye25

Thanks guys, she is 30 years old.

Is she trying to get ill health retirement in respect of her deferred LGPS pension, while continuing to build up benefits in her current (active) LGPS pension?

I suppose it depends, she has been on the sick for nearly a year, it just isn't feasible for her to attend any work sickness or dismissal interviews with her employer in 2025, there needs around another year on the sick.  I am not sure if her employer will pay her for 2 years (majority of it half pay, but nevertheless it is a long time).

If she is able to keep her job then she would like to continue to pay into and build up her active LGPS.

However she may end up dismissed, in which we would want to access her pension benefits for that pension too.

Marcon

madeye25 said:

Thanks guys, she is 30 years old.

Is she trying to get ill health retirement in respect of her deferred LGPS pension, while continuing to build up benefits in her current (active) LGPS pension?

I suppose it depends, she has been on the sick for nearly a year, it just isn't feasible for her to attend any work sickness or dismissal interviews with her employer in 2025, there needs around another year on the sick.  I am not sure if her employer will pay her for 2 years (majority of it half pay, but nevertheless it is a long time).

If she is able to keep her job then she would like to continue to pay into and build up her active LGPS.

However she may end up dismissed, in which we would want to access her pension benefits for that pension too.

There's a considerable anomaly here in that she wants to claim ill health retirement from the deferred LGPS, but also keep working and building up benefits in her current period of LGPS membership. 

I'll leave the specialist input to someone like Silvertabby who knows the LGPS very well, but to answer your questions in general terms:

Q1. Is there any chance that her application won't be approved?

The chances of getting ill health retirement at 30 are considerably lower than at (say) 50, not least because doctors are reluctant to 'write off' someone when they are so young, and also advances in medical treatments (whatever the condition) are more likely to occur the longer someone has between their age now and reaching retirement age.

Q2. I believe she will be able to select a lump sum, which will reduce her pension entitlement, is this completely tax free? It won't be a huge value - maybe £8K - £12K.

A tax free lump is just that: tax free.

Q3. As an alternative way to maximise value of benefits now - is it possible to transfer the whole deferred benefit to CETV and have the whole value in cash?

If the CETV is over £30K she'll need to pay for regulated advice (think £5K+) and the chances of any adviser recommending she transfers must be close to zero. She would need to find a scheme which would accept the transfer and also be willing to accept that she meets the requirements for ill health retirement, given that she's nothing like old enough to take her pension in 'normal' health - HMRC's requirements are stringent (it isn't just the pension provider).

Q4. Given that an IRMP has assessed her as mentioned above, will she need another IRMP assessment, and is it possible for it to be different?

Given her very young age, it's going to be an uphill struggle to persuade anyone that she should be allowed to take an enhanced pension unless the medical evidence is very clear and unequivocal. Any enhanced would cost her employer a huge amount.

Turning to her current (active) pension, it is almost invariably better to start an ill health application before any dismissal is on the cards or has actually taken place, since enhancements for an employee are normally better than for a former employee. I'll leave @Silvertabby to comment on the specifics of the LGPS.

madeye25

Thanks Marcon.

I think its confusing because the question suggests she has a choice, she does not as far as I can tell?

If she remains on sick pay until she returns to work (no real idea when that will be), then she continues to pay into the active LGPS.

If she doesn't remain on sick pay, her employer will need to dismiss her and she no longer pays into her active LGPS.

I think there are only two options really, neither of which is her choice.

Silvertabby

30 is very young in pensionspeak, so I won't beat about the bush.

Getting either of these pensions released on ill health grounds won't be easy.  I'm not a medic, and I know nothing about Severe Aplastic Anaemia, but the problem will be getting the (current post) Occ Health Dr to certify that your partner is unlikely to be fit for work anytime in the next 38 years, especially if she is showing signs of improvement and all forms of treatment haven't yet been exhausted.

As for claiming the deferred benefits under Ill Health, while continuing to work in her current post, although that isn't an absolute 'No', it's unlikely, but depends on the two jobs.  For example, if the deferred post was a manual/ physical post, while the new post is a desk job, then it's possible.  But not if the two posts are the same or broadly similar.  Although applications for both posts would have to go through the full process, does Durham know that she is currently employed with another Local Authority? 

The alternative to getting Ill Health (for both posts) isn't good, I'm afraid.  If she doesn't meet the criteria for Ill Health, but is unable to do her job, then dismissal on ill health grounds may be the result.

Dismissal on ill  health grounds doesn't give immediate access to pension benefits, enhanced or not.  The earliest she would be able to access her LGPS on normal retirement grounds would be 57 (or even 58), and they would be reduced for early payment.

While there is any chance of Ill Health retirement, do not attempt to transfer her benefits to a SIPP.  The LGPS transfer factors are extremely poor, and she still wouldn't be able to access her pension before 57/58 unless given a prognosis of less than 12 months to live.

I'm sorry if this isn't what you want to hear, but it would be very wrong of me to give you false hope.  All I can suggest is that your partner goes through the Occ Health process before she reaches the unpaid sick leave stage.  

My best wishes to you both.

madeye25

Thanks Silvertabby.

I am now getting confused.  Lets be clear about my partners situation, the medical professionals and ourselves are confident she will return to work.

My partner has been assessed (by Durham Occupational Health) as:

 "unlikely to be capable of undertaking (3) gainful employment (4) before reaching 

normal pension age (5), or for at least three years, whichever is the sooner. " 


I am of the understanding that with this statement, she will be entitled to her deferred pension benefits for a short period of time, effectively until she returns to work? As the information I find on LGPS is that there would be a reassessment, or she would need to contact Durham OH if her health situation improves - at which point the deferred benefits stop and will only resume at retirement age.

My own expectation is not that she will receive her deferred benefits permanently, just for a short period of time.

Is that the case or am I wrong?

Silvertabby

madeye25 said:

Thanks Silvertabby.

I am now getting confused.  Lets be clear about my partners situation, the medical professionals and ourselves are confident she will return to work.

My partner has been assessed (by Durham Occupational Health) as:

 "unlikely to be capable of undertaking (3) gainful employment (4) before reaching 

normal pension age (5), or for at least three years, whichever is the sooner. " 


I am of the understanding that with this statement, she will be entitled to her deferred pension benefits for a short period of time, effectively until she returns to work? As the information I find on LGPS is that there would be a reassessment, or she would need to contact Durham OH if her health situation improves - at which point the deferred benefits stop and will only resume at retirement age.

My own expectation is not that she will receive her deferred benefits permanently, just for a short period of time.

Is that the case or am I wrong?

Once deferred benefits are brought into payment, they are paid for life without further review.  Only Tier 3 Ill health benefits (from current employment) are paid for a set time/subject to review.

The standard criteria for Ill Health from deferment is that the applicant is deemed to be unable to carry out appropriate employment before SPA.  But, in the case of those who left after 31 March 2008, that is fine tuned to include those who will be unable to undertake gainful employment within the next 3 years.

From what you say, Durham have assessed that your partner will be unable to undertake gainful employment within the next 3 years.  But, I have to ask again - are Durham aware of her current employment, albeit on sick leave, and her intention to return to work in that job?  

madeye25

Thank you, this is starting to make more sense now. 

The Durham process have not asked for details of her current role, at a different council. Therefore I imagine they're unaware. 

In the IHR report and form, she is assessed against her old job title that she worked for Durham County Council. 

The part about leaving after 31 March 2008 and unable to undertake gainful employment for the next 3 years is interesting, as both of those are true.

Her current role is a slightly different position, but for from a health perspective there isn't any difference. 

Silvertabby

Then that could be a problem if your partner wants to go on working, rather than apply for Ill health in respect of her current post.

She really needs to tell Durham of her current employment status, even if she is on long term sick leave.  Even though there's no direct financial link between Durham and her new post, certain regs are determined by total LGPS membership, and LGPSs bringing benefits into payment will check for other, unaggregated, membership to ensure that the relevant regulations are complied with.