Ill-health early retirement—decision making and exercise of discretion
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Ill-health early retirement—decision making and exercise of discretion

The following Pensions practice note produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Ill-health early retirement—decision making and exercise of discretion
  • The scheme rules
  • The ill-health rule
  • Trustees' discretion
  • Principles from case law
  • Principles from regulatory guidance
  • Employer’s role
  • Employer’s discretion
  • Extent to which employer should provide information to the member
  • Recording decisions and disclosing reasons for decisions
  • More...

Ill-health early retirement—decision making and exercise of discretion

THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES

The scheme rules

The ill-health early retirement provisions of trust-based occupational pension schemes commonly confer decision-making powers on their trustees or sponsoring employers, or both. In some cases, the decision making will be limited to deciding whether the ill-health test set out in the scheme rules is satisfied. In other cases, the ill-health provisions may have a discretionary element in terms of deciding whether to grant an ill-health pension to a member.

The definitions and scope of the ill-health provisions will vary between schemes an issues may arise in interpreting those provisions properly. For further information, see Practice Note: Ill-health early retirement—Interpreting the scheme rules.

The relevant decision maker must consider each application on a case-by-case basis.

The ill-health rule

On receipt of an application for ill-health early retirement, the decision maker must first consult the relevant provisions in the scheme's governing documentation. It is essential to ascertain who decides whether a member is granted ill-health early retirement benefits.

To ensure that an ill-health pension from a registered scheme is an authorised payment, the decision to grant it will require:

  1. evidence confirming that the medical condition prevents (and will continue to prevent) the member from doing his work, and

  2. the member to have stopped working (due to ill-health/incapacity)

For further information, see Practice Note: Ill-health early

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