Ill health pension or severance pay?

Mimi3232 · 14 December 2018 at 9:58PM

Hi,

I am in need of some advice please I have worked for my employer for 4 and a half years but have been off for 18 months due to ill health, I was dismissed this week due to ill health, which is okay with me as I don’t know when I will be able to work again. My problem is I have been offered to either apply for an ill health pension or to take severance pay instead, I am only 20 years old so don’t really know how an ill health pension works, I pay the minimum amount in each month which is £14 and my employer matches that, I have done some research online and it seems I won’t be entitiled to take a lump some unless I only have less than a year to live (which I don’t). So will my employer just keep paying into my pension what they do now until I get a new job? In which case I would be better taking the severance pay? I am hoping to return to work in the next couple of years but this is obviously not guaranteed. I really need some help and advice please.

Thank you in advance.

Paul_Herring · 14 December 2018 at 11:08PM

So will my employer just keep paying into my pension what they do now until I get a new job?

No. That will cease when they stop paying you.

Not sure about the 'ill health pension,' - do you have any documentation from work about that?

Dox · 15 December 2018 at 1:13AM

Sounds as if you are in a defined contribution pension scheme, so the concept of an ill health pension when you are only 20 is a non-starter unless there is something very odd (good odd!) about the scheme. Get full written information from your employer before making any decisions - but remember that HMRC rules require you to get written evidence from an appropriately qualified medical practitioner that you are so ill you are unlikely to work again until at least your scheme's retirement age (which will be upwards of 60 in all probability). I sincerely hope for your sake that will not be a criterion you will fulfil.

You might also check if your employer offered something called PHI (permanent health insurance, aka salary replacement - nothing to do with private medical cover such as BUPA) and if so, were you covered by it?

Mimi3232 · 15 December 2018 at 3:14AM

Thank you both of you very helpful, I think I’m just going to ring the personnel department tomorrow if there are open if not then i will ring them Monday, as I definitely want to get all the facts before making a decision. I will post an undate when I get the information.

Thanks again.

Ill health pension or severance pay?

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