classic ill-health retirement pension benefits - The Civil Service

classic ill-health retirement pension benefitsA brief guide to the benefits available

Your questions answeredHow does the ill-healthretirement procedure work?You can ask for ill-health retirement.Alternatively, your employer may putyou forward. In both cases, the scheme’smedical adviser must be satisfied thatyou meet the ill-health retirementcriteria. If they find that you do, youremployer will then decide whether toretire you.How are your benefitsworked out?You will receive immediate paymentof your pension and lump sum. Yourpension may be enhanced (that meansyou will receive added years of service).Your pension is worked out as 1/80thof your pensionable earnings for everyyear of your completed reckonableservice.You also qualify for a tax-free lump sum.It is worked out as three times yourpension and is payable immediately.You will also be able to choose to giveup part of your pension for an additionallump sum. You can choose how muchextra lump sum you want, up to amaximum of your pension x 33/14, butyou must give up £1 of annual pensionfor each £12 of lump sum.You can find out how much additionallump sum you can take, and the effectit will have on your pension by using theLump sum calculator on the Civil ServicePensions website (or you can ask yourMyCSP Pension Service Centre to do thisfor you if you do not have access to thecalculator).Reducing annual pension in this waygenerally has no impact on dependants’pensions as these are based on yourpension before you give any up for ahigher lump sum. However, if you areaged 75 or over when you die, the taxrules on pensions will restrict the totalof any dependants’ pensions payableto a maximum of the amount of yourpension at the date of your death.As taking a higher lump sum reducesyour pension, this might lead to yourdependants’ pensions being reduced ifyou die after reaching 75. But this is onlylikely to be an issue if you leave two or3

• Over ten years’ reckonable serviceYes. Your reckonable service isincreased under Method A or B,whichever gives the best result:Method AYour reckonable service is increasedto 20 years, or, if it is less, to theamount you would have built up ifyou had worked until five years afterpension age.Method BYour reckonable service is increasedby 62/3 years, or, if it is less, to theamount you would have built up bypension age.Note: A sum may be deductedfrom your lump sum to cover thecontributions due on the widow’s,widower’s or surviving civil partner’sbenefits for any enhanced period ofreckonable service. If you had alreadyopted to pay additional contributionsfor widow’s, widower’s or surviving civilpartner’s benefits, this deduction may bereduced or eliminated.benefits from your lump sum. Contactyour MyCSP Pension Service Centre forfurther information.Can I appeal against myemployer’s decision toretire me/not to retire me?Yes. There is an appeals process you cango through. Your MyCSP Pension ServiceCentre can give you details.If any of your reckonable servicewas before 1 June 1972, you may havea further deduction for widow’s,widower’s or surviving civil partner’s5

Other informationWhat are the criteria forill-health retirement benefits?The criteria are that you are preventedby ill-health from discharging your dutiesand that your ill-health is likely to bepermanent.• Prevented means having asignificant incapacity. It does notmean ‘unwilling’, ‘disinclined to’ or‘inconvenient to’ undertake duty.• Ill-health means a recognised medicalcondition giving rise to the incapacity.Diagnosis must be supported byclinical findings.• Discharging duties means providingregular and effective service in thenormal duties of the grade.• Likely means on a balance ofprobabilities.• Permanent means until normalretirement age for your job.Injury at workIf you retire as a result of an injurysustained, or a disease contracted, inthe course of official duty, additionalbenefits may be payable under theCivil Service Injury Benefit Scheme.You should contact your employer forfurther information.Pensions increaseYou will receive cost of living increaseson your ill-health retirement pensionfrom the time it comes into payment,regardless of your age at the time youretire.For more information and advice aboutspecific benefits, please contact yourMyCSP Pension Service Centre.6

www.civilservice.gov.uk/pensionsThis leaflet has been produced by MyCSPon behalf of the Cabinet Office.© Crown copyright December 2012Printed by St Ives Direct PBIHR