Ill Health Early Retirement

prestonian_2

I have been unable to work for several years due to a long term illness. I am currently receiving monthly payments from my Employer under their Long Term Disability Scheme. These are just sufficient for me to cope financially.

My concern is that as an alternative to me being a claimant under the Long Term Disability Scheme my Employer may consider offering me early retirement due to ill health. This would provide me with a much reduced income on which I could not manage financially.

I do not want to be offered early retirement and wondered if this is an option open to my Employer or if this situation would only arise if I asked for it to be considered.

My Pension Scheme members Booklet states that "If you are too ill to continue working ... you may seek early retirement at any time subject to the consent of the Group".

The Staff Handbook states "The Group also reserves the right at its sole discretion to consider the option of Ill Health Early Retirement within the Group's Pension Scheme for any potential claimant.

These two statements have a different emphasis. I would like to know what the reality of the situation is to help my financial planning. I do not want to approach my Employer with this query should it make them reconsider their options.

Sorry about the length of the posting. Just trying to explain my position and query.

I look forward to receiving any knowledgable advice on this.

TrickyTrotter_2

Sorry to hear your not in the best of health.

It depends really on what the terms and conditions of your employment are. You say there is a staff handbook does this cover ill-health in more detail?

Most employers with pension schemes usually have the option to pusue ill-health retirement with or without the support of the employee, but they often need medical evidence from you and their medical advisors to satisfy ther pension scheme trustees. I appreciate this may be less favourable than your current position, but other less considerate employers might have already sacked you, although the Disability Discrimination Act has made most wary of such an approach.

Is there a welfare/counselling service you can use to explore your options, or are you in a trade union?

Debt_Free_Chick

It's difficult to advise without knowing what the Rules of the pension scheme state. However, they would normally indicate that you have to apply for early retirement (ill health) i.e. you cannot be "early retired" without your consent/involvement.

The company is more likely to suggest ill health early retirement to you as an option, if they wanted you to go this route. If they do, you should co-operate and consider it. Get all the facts & figures and if the pension is less than the income under the Disability Scheme then raise it with them. The company would have the option to increase your ill health pension, but is under no obligation to do so - it would be by way of a discretionary award of an amount higher than you were strictly entitled to.

The long term disability scheme is not necessarily an easier ride ... you only get the income for so long as the insurance company pays the claim. And they are likely to review your illness at some stage to see if you still meet their terms, under the claim. You will probably find that they have the right to terminate payment of the claim, under certain circumstances. It's worth checking out all the details.

HTH

Pal

I wouldn't worry too much about the terms of the contract. They are only "get out clauses" that the company can use if it needs to because of your circumstances.

If you are in an insured income continution scheme then, as DFC says, you will be entitled to an income for as long as the insurer agrees that you are too sick to work. If your health recovers then you can return to work, but for as long as you are sick the claim should continue.

The wording in your contracts etc is only to cover the situation where the insurer feels you are able to work, but the company disagrees with the insurer (and feels you are not capable of working) but is unable to overturn their decision. In that scenario the income benefit stops and the company has to find another way of paying you, or it can simply dismiss you. In these circumstances it may be able to use the pension scheme to provide you with ill health benefits rather than leave you without any income at all.

As I said before, if you are genuinely ill then I wouldn't worry about it. It is only in the cases of dubious claims that problems tend to arise.

Debt_Free_Chick

If you are in an insured income continution scheme then, as DFC says, you will be entitled to an income for as long as the insurer agrees that you are too sick to work.  If your health recovers then you can return to work, but for as long as you are sick the claim should continue.

Good points, well made Pal

One thing to look out for is the precise definition of "disability" under the income protection plan. In some cases, you only need to be unable to do your normal job i.e. the one you were doing before you became ill.

In other cases, you have to be unable to do any job. The analogy here is the brain surgeon who loses a hand. OK - he can no longer be a brain surgeon, but he could, for example, "sweep the streets".

And some policies require that you are permanently disabled i.e. unlikely to ever work again.

Suggest you get full details of the income protection plan (Long Term Disability Scheme) by asking your employer some searching - but polite - questions.

HTH

stevem01

I have been unable to work for several years due to a long term illness. I am currently receiving monthly payments from my Employer under their Long Term Disability Scheme. These are just sufficient for me to cope financially.

My concern is that as an alternative to me being a claimant under the Long Term Disability Scheme my Employer may consider offering me early retirement due to ill health. This would provide me with a much reduced income on which I could not manage financially. 

I don't know prestonian's circumstances nor his/her pension scheme rules but some employer run defined benefit pension schemes (my employer's scheme for instance) can actually be quite generous in the manner in which they treat early retirement due to ill-health.

Taking the example of my employers scheme rules they state:

If you are forced to give up work at any age due to serious ill health or incapacity, you may be entitled to an immediate pension. This will be calculated as for normal retirement, but using your Final Pensionable Salary at the date of leaving and your potential Pensionable Service to Normal Retiring Age

This means that any ill-health pension granted under these scheme rules is actually paid on the basis that you would have contributed to the occupational pension for ALL of the potential period from your current age up to normal pension retirement age (i.e. aged 65 for a man). Thus you are credited with the pension you would be due if you had worked up to normal retirement age.

The only difference is that the salary on which your ill-health pension is based is your current final pensionable salary (this can be a complicated calculation but is usually around 95% of normal basic earnings minus the OAP)

If prestonian's pension scheme rules are anything like the rules outlined above then the granting of an ill-health pension effectively puts the recipient onto a pension income that they would receive if they had worked up until normal retirement age.

It may be worth making enquiries as to whether rules such as these would apply.

Pal

While you are correct, it would be highly unusual for a company to allow an employee who is a successful claimant under an income continuation insurance policy to then make use of generous ill health retirement provisions.

It would be like paying insurance against your house burning down, having it burn down and then throwing away the insurer's cheque and paying to rebuild it yourself.

As a result most pension schemes remove their ill health early retirement provisions (or make them much less generous) when the company starts offering income continuation insurance.

1connect

Do not muck about with this one , seek professional advice, and when I say that I mean get advice from a BARRISTER not an overcharging theiveing f*****g scumbag err I mean solicitor.
Check you house insurance policy - many have a free legal advice line - and some may actually cover you for legal costs if it meets their criteria (normally if a conract has been broken (covers employment or some precifically include employment disputes) - so ring your insurance company and check - do it today - or better still do it NOW!
If you have two conflicting pieces of inflrmation ie one says you will go on long term disability and the other says company has right to retire you then you should put this in context i.e. when were you informed of this? and did it form part of a signed COE contract of employment, I would say that if the company just issed you an ammendment saying they can do this and you didnt agree by signing, and it stated there was a disbility scheme previously and didnt state they could push you into early retirement at the time then you would argue that you were entitled to the diability benefit long term and that they are in brech of contract if they force you to retirement , and therefore you might have a case for an industrial tribunal to claim losses which would be the difference in value of the two incomes for the applicable period. however seek proper advice from a BARRISTER... also it would be vital to get all of the appropriate paperwork, and arrange them in date order - go through them yourself following its time line, the answers will come from that.
Also bear in mind that if any of the arrangements are provided from an inurance / pensions company that are regualted you may have a right to make a complaint to the Finacial Ombudsman, even if you are not the policyholder but only the beneficiary.
I had a very similar situation, I was booked for an industrial tribunal, but won an ombudsman complaint before the hearing, I was covered for the cost through my house inurance - the legal bill was £17k, but be warned the outcome could have easily have been that I lost and was lumbered with a massive legal bill.
there is NO legal aid for industrual tribunals.
In my opinion if they have 'properly' notified you that they have the option of retiring you and you have consented (which could also be by not complaining if you were invited to say an a company memo etc) and this is not in direct contadiction of information and arrangments you have been given or agreed to previously then they can probably do it and you probably have no come back.

Disclaimer ! anyway all of the above is just my opinion and you should not take any of it as advice, or act on any opinion I make here.
Good luck with the battle.
G

Pal

I don't think that prestonian has any cause for a complaint against their employer yet, they are just concerned about what might happen.

As I said before, for as long as he is a justifiable claim under the income continuation policy then there is nothing to worry about. If he recovers and can return to work then that is the best outcome all parties.

The only problem is where the insurer believes that prestonian can work but the employer does not. In those rare circumstances they may attempt to dismiss him or alternatively make him redundant. They can then consider whether to pursue the legal option.