NHS Pension Scheme: Ill Health Retirement

Introduction

A doctor is able to retire on the grounds of ill health if permanently incapable of carrying out his or her duties as a result of illness. It is important to appreciate that permanent incapacity must be established. The way in which this is established and the procedures to be gone through are discussed in more detail below.

Benefits Payable

In most cases an enhanced pension and lump sum will be payable, but this depends on age and length of service.

Enhancement of Service

If service in the NHS Pension Scheme is less than 2 years then no pension is payable and the only benefit is a refund of contributions. For service between 2 and 5 years the service is not enhanced and the pension payable is simply that accrued up to the date of leaving the pension scheme.

For service of 5 or more years, there is potential for enhancement of service. The details are as follows:

The reference to "limit age 60/65" means that service cannot be enhanced beyond what would be accrued if the doctor worked to age 60 or 65.

For example, a 54 year-old with 30 years' service has the following:

• a potential maximum enhancement of 65 years
  
• a limitation of years to the age of 60
  
• an actual enhancement therefore of 6 years
  

Calculation of Benefits

The pension and lump sum benefits payable will be based on the enhanced service described above. Using the above example, an enhancement factor is calculated as follows:

This enhancement factor is then applied to the pension actually accrued to date. If for instance the doctor has built up a pension of £18,000 per annum, then the ill health pension would be calculated as follows:

The lump sum is usually 3 times the pension and in this example would therefore be £64,800.*

To give another example, for a 49 year old with 25 years' service the enhancement will be 6 years and the enhancement factor calculated as follows:

If the pension accrued to age 49 was £14000, the ill health pension would be:

The lump sum would be £53199*

* The lump sum may be less than 3 times the pension for married men with service before 1972 and doctors should consult the following BMA guidance notes for full details of how pensions and lump sums are calculated:

GPs should consult the General Practitioners guidance note.

Consultants and other salaried doctors should consult the Salaried Doctors guidance note.

Applying for ill health retirement

(Application and appeals procedures may vary in Scotland and Northern Ireland - please contact the local pensions agency, details below).

The first step is to obtain an ill health retirement application form from the employer, or the health authority or board in the case of GPs.

This will need to be accompanied by medical evidence which establishes that the incapacity is permanent. It should then be submitted to the Pensions Agency (details below) via the employer or health authority/board.

The Pensions Agency in England and Wales has recently appointed new medical advisers - Medical and Industrial Services Ltd (MIS). MIS will consider the application and advise the doctor and the employer/health authority of the decision.

In the past many applications were accompanied only by a short report from the applicant's GP. The intention in future is to attempt to obtain all available evidence, including any specialist's report, at the outset. This is intended to streamline the process by eliminating requests for more examination reports, etc. The Agency's documentation is currently under review with this objective in mind.

MIS have been briefed by the Agency to be amenable to informal approaches before the application has been submitted and to be willing to liaise on a day to day basis with members and employers. MIS (Pensions Division) can be contacted on 0990 502061.

If an application is rejected, the decision will be reviewed if fresh medical evidence is submitted.

MIS may also suggest that the position be reviewed after 3, 6 , 9 or 12 months in order to gauge the impact of any beneficial medical treatment being received by the applicant.

Appeals

If an application is rejected, even after the submission of the fresh medical evidence and/or a review of the effect of treatment, then there is an appeals process which can be used.

Formal appeals against rejection of applications will be heard by a senior Pensions Agency officer in conjunction with a senior medical adviser from MIS who will be a Consultant in Occupational Health. A thorough review of all available evidence will be undertaken.

If this appeal is rejected, the next stage is to seek an independent determination from the NHS Executive.

The final stage of the appeals process is to approach the Pensions Ombudsman.

The Pensions Agency has agreed to be bound by the decision of the NHS Executive and the Pensions Ombudsman.

Modern Occupational Illnesses

In 1989/90 there were 6,627 ill health retirements from the NHS pension scheme in England and Wales. These were mainly physical-type illnesses such as musculo-skeletal, back problems, accidents, terminal illnesses, etc. In 1995/96 the number of retirements was 9,163 - an increase of 38%. Despite this dramatic increase in applications accepted, the percentage of applications rejected has also risen sharply, although the Pensions Agency insist that there has been no change in policy in considering applications.

What has happened is that in just 5 years or so the nature of applicants' illnesses has changed significantly. 24% are now categorised by the Agency's medical advisers as psychiatric/neuroses, with another 4% coming under the chronic fatigue syndrome umbrella (including myalgic encephalomyelitis, post viral fatigue syndrome and fibromyalgia).

The Agency says that a feature common to the new types of application is that issues of treatment and prognosis are more difficult to pin down and often lead to further investigation. In many cases the illness itself may not be permanent. However, this does not necessarily mean that the sufferer can return to their current employment, which may in itself be the major factor in the illness. This circularity of employment-illness-dysfunctionality can itself lead to permanent incapacity.