DEVON PENSION SERVICES

3.3–RETIREMENTS

REQUEST FOR RETIREMENT ESTIMATE

An employer from time to time will need to request an estimate of benefits for an employee who may be retiring on the following grounds:

Normal Retirement
Usually the member is asked to request an estimate of benefits when they plan to voluntarily retire from age 60 onwards from Devon Pension Services direct and not via their employer. The request for an estimate can be received either in writing or by email (mailto:). The details will be returned direct to the member’s home address.
Flexible Retirement
A member, with the employers consent, can take flexible retirement whereby they will receive their retirement benefits or part of their retirement benefits due to a reduction in their hours or pay. Form EAS12 must be completed by the employer and sent to Devon Pension Services who will calculate the member’s retirement benefits together with any ‘Strain Cost’ the employer may be liable to pay.
All employers must have a published policy on how they deal with flexible retirement.
If a member approaches Devon Pension Services for flexible retirement figures they will be told they need to contact their employer. No figures will be passed direct to the member.
Redundancy or Efficiency Retirement
Form EAS7 must be completed by the employer and sent to Devon Pension Services who will calculate the member’s retirement benefits together with any ‘Strain Cost’ the employer may be liable to pay.
All employers must have a published policy on how they deal with redundancy or efficiency retirement.
If a member approaches Devon Pension Services for redundancy or efficiency retirement figures they will be told they need to contact their employer. No figures will be passed direct to the member.
Ill-health Retirement
Form EAS6 must be completed by the employer and sent together with a copy of the ill-health certificate, to Devon Pension Services who will calculate an estimate of the member’s ill-health retirement benefits based on either Tier 1, 2 or 3 as advised on the certificate.
If a member approaches Devon Pension Services for ill-health retirement figures they will be told they need to contact their employer. No figures will be passed direct to the member.

ACTUAL RETIREMENTS

When a member actually retires the employer is required to complete Form EAS2 as soon as possible after the leaving date and forward to Devon Pension Services.

Strain Cost

Where a member retires early on Redundancy, Efficiency, Flexible or employers consent grounds very often there will be a ‘Strain Cost’ that the employer will need to pay into the Pension Fund when the member actually retires. The ‘Strain Cost’ can be paid as either a one off lump sum or if preferred over a period of 3 years at a slightly greater cost.

Details of the ‘Strain Cost’ will be given to the employer when a request for an estimate of benefits is requested.

Please note there is not a ‘Strain Cost’ where a member retires on the grounds of ill-health.

Once the member has retired and an Form EAS2 has been sent to Devon Pension Services, either an invoice for the full ‘Strain Cost’ will be sent to the employer or if payment is to be made over 3 years an invoice will be sent in the following three Aprils.

Award by employer of additional membership and/or pension

An employer can award a member the following:

Augmentation

An employer can choose to augment an active member’s period of membership up to a maximum of 10 years. The cost to the employer will be calculated by the Scheme Actuary and the employer will be liable to pay not only the cost of awarding augmented service but the cost made by the scheme actuary for providing the calculation.

The employer will be liable to pay these costs as an immediate one-off payment.

Additional Pension

The employer can choose to award the member with additional pension up to a maximum of £5000.00 per annum. GAD has issued tables to calculate how much the employer costs will be for awarding additional pension.

This option can be made at anytime and up to 6 months after the member has retired.

The employer will be liable to pay the cost as an immediate one-off payment.

ILL-HEALTH RETIREMENT

A member can be retired on ill-health grounds if they’re medically certified as being ‘permanently incapable of discharging efficiently the duties of his or her current employment’.

The LGPS provides three levels of ill-health retirement benefits, depending on how likely it is that the member will be able to find work again before retirement age.

There’s no lower age limit. First and second tier benefits are payable for life. Third tier benefits are payable for a maximum of three years and must be reviewed after eighteen months.

The employer decides if a member qualifies for ill-health retirement and which tier applies; but in doing so, must have regard to the advice of a doctor qualified in occupational health medicine.

FIRST TIER
This tier applies to the more serious cases of ill health, where the member has little prospect of obtaining gainful employment before age 65. Immediate benefits would be payable. In calculating them, the member’s scheme membership would be made up to age 65.
SECOND TIER
This tier applies to members who have little prospect of obtaining gainful employment within the next three years but are likely to be able to do so before age 65. Immediate benefits would be payable. In calculating them, the member’s scheme membership would be made
up by 25% of their remaining service to age 65.
THIRD TIER
This tier applies to members who have little prospect of obtaining gainful employmentstraight away but are likely to be able to do so within the next three years. Immediate benefits would be payable but there would be no award of extra membership.
The employer should allocate the member to one of these three tiers, depending on their likely capability of obtaining gainful employment.
This decision should be made only on medical considerations, based on a doctor’s certificate.
Economic considerations (e.g. the availability of work) should not be taken into account.
Gainful employment means paid employment for at least 30 hours per week for at least a year.
The doctor used must be qualified in occupational health medicine (as defined in the LGPS Regulations) and must be someone approved by the Devon County Pension Fund.

THE ADMINISTRATIVE PROCESS

If a potential ill-health retirement arises, please complete the front page of our Ill-Health Retirement certificate (Form IHCURR1) and arrange for the approved occupational health doctor to complete the rest of it and return it to you.

Based on the doctor’s certificate, complete the ill-health decision Form IHCURR2. Send it to us with the doctor’s certificate (Form IHCURR1) and leaver’s Form EAS2. We will then process the member’s benefits.

Tier one and tier two benefits are payable for life so there’s nothing else for you to do.

Tier three benefits are payable for three years at most and must be monitored as follows:
THIRD TIER ILL-HEALTH REVIEW PROCEDURE
When the Independent Registered Medical Practitioner (IRMP) certifies that a scheme member is entitled to a 3rd tier ill-health benefit the employer is responsible for reviewing the pension during the period of payment. Information below gives details on what procedure the employer should follow and what help Devon Pension Services can give.
EMPLOYER’S RESPONSIBILITY
Please ensure that the following information is given to the member, in writing, on leaving:
  • The latest date the pension will cease in 3 years time.
  • If still in payment the pension will be reviewed after 18 months to confirm any change to the medical assessment.
  • The member must inform the previous employer if they obtain gainful employment (30 hours or more per week for a period of not less than 12 months) as the pension will cease.
What the employer must do once the pension is in payment:
  • Review the medical condition of the member after 18 months on pension, by referring them to the IRMP for re-assessment (Form IH3RW1).
  • Inform Devon Pension services that the third tier conditions still apply (Form IH3RW2)
  • Inform Devon Pension Services at anytime when the pension must cease i.e .on obtaining gainful employment or medical re-assessment (Form IH3RW2).
  • Inform the member in writing when the pension is ceasing.
  • Inform Devon Pension Services if they need to recover an overpayment of pension (Form IH3RW2)
  • Inform Devon Pension Services if the member has be re-assessed to a 2nd Tier ill-health pension (Form IH3RW2). A copy of the IRMP medical certificate is required. (Form IH3RW1)

DEVON PENSION SERVICES ACTIONS
Devon Pension Services will provide the following information to help the employer to achieve the above:
  • Issue a pay advice to the member each month with a message explaining that they must notify their previous employer if they obtain gainful employment. This may not be possible every month as other statutory messages maybe be required instead.
  • Inform the employer when the member has been on pension for nearly 18 months and confirm the member’s current home address held on the payroll record.
  • Inform the employer when the member has been on pension for nearly 36 months and confirm the member’s current home address held on the payroll record. This letter will confirm that Devon Pension Services will cease the pension at 36 months.
  • Recover any overpayment as instructed by the employer.

PROTECTIONS

  • 1997 LGPS members aged 45 or more on 31 March 2008 would receive the membership increase that would have been awarded under the 1997 scheme if this would be greater than the 2008 scheme award. The extra benefits, however, would be based on the 2008 scheme rates.
  • If a member is purchasing added year under the old 1997 Regulations then for their added years to be ‘paid up’ they will need to satisfy the ill-health conditions under the 1997 regulations. It is possible for a member to satisfy the old ill-health conditions but not the new 2008 conditions and visa versa, which could mean that their added years is ‘paid up’ but they are not entitled to an ill-health benefit or they are entitled to an ill-health benefit but their added years is not ‘paid up’ and will be apportioned.

FORMS TO USE
FORM / STATUS / DESCRIPTION
IHCURR1 / CURRENT / Medical certificate for current member to be completed by IRMP
IHCURR2 / CURRENT / Employer’s decision notice for current member to Devon Pension Services.
IH3RW1 / PENSIONER / Medical certificate for third tier pensioner review to be completed by IRMP.
IH3RW2 / PENSIONER / Employer’s decision notice to Devon Pension Services on third tier review.
IHDB1 / DEFERRED / Medical certificate to be completed by IRMP for deferred benefit into payment early on health grounds.
IHDB2 / DEFERRED / Employer’s decision notice to Devon Pension Services for deferred benefit into payment early on health grounds.

USEFUL LINKS

Third Tier Ill-Health Benefits – Q & A paper (DCLG – May 2009)

Circular 212 – Ill-Health Certificates (LGE – July 08)

Guidance on new Ill-Health retirement provision – Regulation 20 & 31 of Benefit Regulations (DCLG – June 08)

Question to DCLG about third tier ill-health pension ceasing

CLG Statutory Guidance on ill-health retirement (November 2008)

3.3 - Retirements (December 2008)

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