Ill-health early retirement—interpreting the scheme rules
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Ill-health early retirement—interpreting the scheme rules

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—interpreting the scheme rules
  • Nature of ill-health early retirement benefits
  • Pre-A Day—incapacity
  • Post A-day—Ill-health condition
  • Where scheme rules wider than post A-day ill-health condition
  • Where scheme rules narrower than post A-day ill-health condition
  • Validity of ill health pensions granted pre A-day
  • Assessing ill-health
  • Scheme rules—interpretation issues
  • Issues relating to inability to work
  • More...

Ill-health early retirement—interpreting the scheme rules

THIS PRACTICE NOTE RELATES TO REGISTERED OCCUPATIONAL PENSIONS SCHEMES

An important aspect of registered occupational pension schemes is their ability to provide ill-health (sometimes referred to as 'incapacity') benefits. Such benefits are particularly important in circumstances where members are obliged to retire from employment prior to their normal pension date (NPD) due to serious illness.

This Practice Note covers the various issues that may arise when interpreting scheme rules of a registered occupational pension scheme for the purpose of determining whether ill-health benefits should be granted to a member. For further information on the considerations relevant to trustees of occupational pension schemes and/or employers required to make decisions in relation to members’ ill-health early retirement requests, see Practice Note: Ill-health early retirement—decision-making and exercise of discretion.

Nature of ill-health early retirement benefits

Ill-health early retirement benefits are calculated in accordance with the scheme rules. Those provided by defined benefit occupational pension schemes are frequently (but not invariably) more generous than 'normal' early retirement benefits.

For example, ill-health early retirement pensions provided by defined benefit occupational pension schemes are often paid without actuarial reduction factors being applied to compensate for the fact that such pensions are being paid prior to NPD (and therefore for a longer period than usual). Also, in some cases, prospective pensionable service (from the date of leaving actual pensionable service due to

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