Leaflet - Ill-health retirement benefits

A key flexibility of the Teachers’ Pension Scheme (TPS) is the two levels of ill-health retirement benefits that may be paid. This dual approach aims to support teachers unable to carry out any employment due to illness or injury and those who, while no longer able to work as a teacher, are still able to do other work.

Key points

Ill-health benefits may be paid if you have to retire before Normal Pension Age (NPA) because you are permanently incapable of teaching due to illness or injury.

• Applications should only be submitted after all other avenues, such as redeployment, have been exhausted.
• You must provide medical evidence that your illness permanently prevents you from teaching. Ill-health benefits can be paid at two different levels depending upon the severity of the illness.

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What are the different levels of benefits?

• Total Incapacity Benefits (TIB) and
• Partial Incapacity Benefits (PIB).

What is the difference between TIB and PIB?

• TIB would be awarded if you are assessed as being permanently unable to teach and unable to undertake any other gainful employment.
• PIB would be awarded if you were assessed as being permanently unable to teach but able to do other work.
• If you receive TIB, your service will be enhanced, but if you receive PIB, it will be based on your accrued benefits. If your service is enhanced, this means that it will be increased to more than you have completed when your application is accepted.
• An application for TIB can be considered provided the member left service on grounds of incapacity and the member applies within 6 months of leaving either
  • pensionable employment or
  • ceasing the payment of combined contributions or reservist contributions
• An application for TIB can also be considered if the member applies for benefits whilst on sick leave, maternity leave, paternity or adoption leave, or a career break which immediately followed a period of pensionable employment.
• If you are not in pensionable employment and you do not meet the above criteria, only PIB can be awarded and your service will not be enhanced. For this to happen, you must also meet the criteria for TIB.

Who will decide if I can receive ill-health benefits?

• The medical advisers contracted by the Department for Children, Schools and Families will consider your application. The Secretary of State will then decide if you can receive benefits based upon the medical advisers’ recommendation.
• Your degree of incapacity will determine whether you are entitled to TIB or PIB.

How much enhancement can be given?

• The total amount of enhancement is half the service you could have completed before NPA for TIB.
• There is no enhancement for PIB.

What if my life expectancy is less than one year?

• If you are terminally ill, you may be able to convert your pension into a lump sum.
• You must request this when you apply for ill-health benefits, as it cannot be made after you receive an ill-health pension.
• This does not affect any survivors’ pensions paid after you die.

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How do I apply for benefits?

• If you are still employed you should get the two forms required for your application from your employer. One form is for you to complete with your employer, the other is for the medical evidence to support your application.
• If you are no longer employed as a teacher you can download the forms from the Forms and Leaflets section.
• If you are in service, both forms should be returned together to TP by your employer or by you if you are out of service.
• Employers and their occupational health advisers must look at ways of helping you return to work, e.g. re-deployment, part-time working or a transfer to a post with less responsibility, or consider other workplace adjustments, before concluding that ill-health retirement may be appropriate.
• You and your employer’s occupational health advisor, in conjunction with your medical practitioner, need to provide the medical evidence and complete the application forms.
• If you left pensionable teaching within 12 months of submitting your application, the medical information sections of your application form must be completed by your ex-employer.

What happens after TP receives my application?

• Your application will be assessed by medical advisers who are qualified occupational physicians who will make the recommendation on whether or not to grant you ill-health benefits.
• If your application is accepted, you must cease employment immediately.
• If your application is accepted and you are in pensionable employment, benefits are due from the day after your last day of pensionable employment.
• If you are accepted after leaving pensionable employment benefits will be due, depending on circumstances, either:
  • the day after your last day of pensionable employment;
  • the day on which you became incapacitated; or
  • the day six months before the date of the last medical report used to accept your application.
• Your pension is paid monthly in arrears on the day before your birthday i.e. if your birthday is 22 June then your pension will be paid on the 21st of each month.

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How is my pension and lump sum calculated?

• If you were a member of the TPS prior to 1 January 2007, your pension is 1/80th of the average salary for each year of pensionable service.
• The lump sum in this circumstance is three times the pension.
• If you became a member of the TPS on or after 1 January 2007, your pension is 1/60th of the average salary for each year of pensionable service, but you will only receive a lump sum if you decide to convert part of your pension to a lump sum.
• Further information about ‘average salary’ can be found in the Fact Sheet Average salary available on the web site.

I am buying additional pension by installments, what will happen?

• If you are buying additional pension, and you have not completed the payments then, provided you were in good health when you started to buy the additional pension and have paid for at least 12 months, you will be excused any further contributions.

I am buying past added years and the contribution period is not completed what will happen?

• If you are buying past added years and you have not completed payment, you may be excused the payments due up until your 60th birthday.
• If there is an amount that is due after your 60th birthday, you will be given the option of accepting the service credit based on the payments made or to pay the remaining contributions. If you are intending to use 30% or more of your lump sum to increase your pension benefits, this could result in Her Majesty’s Revenue and Customs subjecting the whole of your lump sum to a tax charge of 40%. In addition a further 15% surcharge could be due if the proportion of your lump sum that you use exceeds 25% of your pension rights in the scheme.

What happens if I become ill after phased retirement or if I am in pensionable employment after retirement?

• If you have taken phased retirement, then you may receive ill-health benefits based upon your remaining service in the TPS.
• If you become ill while in post retirement pensionable employment, you can apply for an ill-health pension.
• This will be based on the further service.
• You must have completed one year’s service.

Will my pension be increased each year?

• Your pension will be increased each April in line with the Retail Prices Index (RPI).

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Can I return to work?

Returning to teaching

• Ill-health benefits are awarded because you are permanently medically unfit to teach, so if you return to teaching your ill health pension must stop straight away. It is your responsibility to notify TP immediately of any employment undertaken when in receipt of ill-health benefits.
• If you wish to return to teaching, your employer must be satisfied that you are fit to teach in the capacity required.
• If your pension is stopped, another ill-health pension can only be put back into payment if you become ill again and satisfy the medical advisers that you have again become unfit to teach. You can retire on other grounds at the appropriate age.
• If your re-employment is pensionable, future retirement benefits will be calculated to take account of the extra reckonable service and new salary rates.
• If you are considering returning to teaching, you are advised to inform TP.

Taking up employment outside teaching

If you are in receipt of a TIB pension and you intend to return to employment outside of teaching and you want your TIB pension to continue, you must provide the Secretary of State with a certificate from a registered medical practitioner. This must state that in the opinion of the medical practitioner you still meet the medical condition for TIB to be paid. The nature of your proposed employment will also assist the Secretary of State in coming to a decision about whether or not the TIB pension can continue to be paid.

In all cases, TP will need to know:

• the name and address of your employer;
• the date your employment started;
• the duration, if known;
• the rate of salary;
• the nature of employment (indicating whether it is full or part-time).

If you forget to tell TP about any employment whilst receiving a pension and you are overpaid, TP will recover this debt from you.

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Where there is any difference between the legislation governing the Teachers’ Pension Scheme and the information in this leaflet the legislation will apply.

For more information on this or any aspect of the TPS, you can Contact Us.