Employers Meeting 14 January 2015 01 Agenda for this morning - PowerPoint PPT Presentation

Shropshire County Pension Fund Employers Meeting 14 January 2015 01

Agenda for this morning Understanding Ill Health Retirements 09.30-10.15 Debbie Sharp, Pension Administration Manager LGPS Data Requirements 10.15-11.00 Cheryl Morrell, Pension Systems & Support Lead Rebecca Purfit, Communications Officer Break 11.00-11.15 The Pensions Regulator 11.15-12.15 Robert Plumb, Scheme Liaison Manager Questions 12.15-12.30 Close 12.30 02

Understanding Ill Health Retirement Debbie Sharp Pension Administration Manager 03

What is Ill Health Retirement? • Important protection for current and former (deferred) LGPS members • Early payment of pension (and lump sum if applicable) • Enhancement in some cases (current members only) • Three tier benefit structure for current members • One tier benefit structure for deferred members • Employers decision to terminate employment and award benefit 04

What do the regulations say? Active Member Regulation 35. — (1) An active member who has qualifying service for a period of two years and whose employment is terminated by a Scheme employer on the grounds of ill-health or infirmity of mind or body before that member reaches normal pension age, is entitled to, and must take, early payment of a retirement pension if that member satisfies the conditions in paragraphs (3) and (4) of this regulation (3) The first condition is that the member is, as a result of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment the member was engaged in. (4) The second condition is that the member, as a result of ill-health or infirmity of mind or body, is not immediately capable of undertaking any gainful employment. 05

What do the regulations say? Deferred Member • Depends on the date the member left your employment/scheme • Determines certificate to be completed - 1997 - 2008 - 2014 06

Employer Responsibilities Active Member • As the employer you must separately decide: – Is the employee fit to continue in their current employment? – Are they entitled to an ill health pension? – What tier of benefits should they receive? • Your pension decision must be informed by the opinion of an Independent Registered Medical Practitioner (IRMP) • But ultimately these are employer decisions • Popular subject for creating appeals – Important to get it right! 07

Decision 1: Is the employee fit to continue in their current employment? • Make this decision after receiving employment advice from your OH advisor • Examples: – Temporary illness that is taking several months to treat – Potentially permanent condition for which normal medical treatment regimes have not yet been exhausted – Permanent condition where treatment has now finished 08

Decision 2: Is the employee entitled to an ill health pension? • To be entitled to an ill health pension the employee must: – be below NPA – be dismissed on grounds of ill health – have a least two years qualifying service* – be permanently incapable of discharging efficiently, the duties of their current employment – Not be immediately capable of undertaking gainful employment – have been certified by the IRMP as meeting the ill health pension criteria *Not just 2 years in current employment, they may have other qualifying service. 09

What does Permanently Incapable mean? • The member will, more likely than not, be incapable until, at the earliest, his/her Normal Pension Age - Please note ‘normal pension age’ is now the individual member’s State Pension Age, or age 65 if later. • “More likely than not” is key - Probability Test - If a member would, on the balance of probabilities, recover sufficiently to be capable of undertaking their current/former employment before their normal pension age they cannot be said to be permanently incapable 10

What is ‘Gainful Employment’’? • Any paid employment of at least 30 hours in each week for a minimum of 12 months • A permanent variable hours contract only becomes gainful employment when a pattern of 30 hours has been established • A full-time fixed-term contract of less than 12 months is not gainful employment • Could become gainful employment if consecutive fixed term contracts extend to a year or more 11

Decision 3: What benefit is the employee entitled to? • Once you decide that someone is entitled to an ill health pension, you will need to decide what level of benefits to award them • The IRMP will indicate their medical opinion as to which tier of benefits is appropriate but it is your decision not the IRMP’s • This is an important decision as it will determine: - whether or not the employee is entitled to any enhancements - whether the pension is permanent or temporary 12

Ill Health Tiers • There are three tiers of ill health benefits…. 13

Ill Health Tiers • There are three tiers of ill health benefits: Maximum 3 years but will cease if members obtains, or becomes capable of 12 obtaining gainful employment

Ill Health Liability Insurance? Products are available but there has not been an appetite for them in Shropshire as yet….. 15

Ill Health Guidance On the secure area of our website you will find: • Guidance • Copies of certificates to be completed by IRMP (different for each type of member) • List of IRMP’s • Leavers form Is there anything else you would find helpful? • Wording for letters? • Flow charts? • Ill Health pension checklist? 16

Employment vs Pension issues • Two separate processes that come together towards the end – Are you going to continue to employ this person? – Are they eligible for an ill health pension? • For success you have to manage the employees expectation • Never promise a pension until the IRMP has signed the certificate that in their opinion they meet the criteria and you agree 17

Preparing referral to the IRMP • Meet with employee to explain ill health process • Ensure all relevant medical information included – audit before referral and check with employee • Provide copy of the relevant documents • Be very clear about the duties of the job - Focus on those duties the employee finds difficult with their medical condition - Be specific: “is expected to carry a 15Kg sack 100m at least twice a day” - Detail any adjustments made to help employee manage their ill health - Keep delays to a minimum 18

Preparing referral to the IRMP (cont).. • Are there any other questions you would like a medical opinion on? • Who's responsible for medical information release? • Ensure correct certificate is provided (all certificates on our employer pages) 19

Why it matters – Mr Beckham • Is a groundsman • He is suffering from a relatively minor but permanent balance problem which means he can’t walk in a straight line • OH doctor told: Job description = care of the school playing fields including grass mowing, rolling, maintenance of pitches and associated equipment. • Do you think he is permanently incapable? • Does your opinion change if you’re told 50% of his time is spent maintaining the pitch markings using a white line machine? 20

Timeliness is essential • Make the decision to refer as quickly as possible • May not be in employees best interest to delay decision • Keep the time between consultants reports being received and referral to a minimum • Once IRMP opinion received suggest move to dismissal quickly 21

After Receiving Independent Registered Medical Practitioners (IRMP) Opinion There are a number of steps you will need to take once you receive a completed Ill Health Certificate • Step 1: Make formal decision regarding pension entitlement - Start with the Independent Doctors opinion related to decision on tier - Consider any suggested alternative employment - Capable of undertaking NOT capable of obtaining - Look at things the Dr can’t – non-medical factors, e.g skills and competencies - Ensure how you made your decision is captured on file • Step 2: Inform the employee of the outcome of the referral to the IRMP and your decision and agree a dismissal date • Step 3: Inform the Pensions Team 22

What does the pension team need from you?  Completed leavers form - PEN006  Copy of the certificate completed by IMRP  If decision is different to IRMP certificate – supporting documents and reason for your decision must be included  P45 (if available) – this should be sent in order for income tax deductions from the pension to be assessed  Notice letter to Employee Make sure you keep the originals on file! 23

Tier 3 Review • Tier 3 ill health pensions are a temporary award for a maximum of three years • There is a specific requirement that you review any Tier 3 pension cases in the following circumstances: - after 18 months - if the pensioner obtains employment - is capable of obtaining employment - if the pensioner asks - at the end of the three year period when the pension should cease unless you choose to upgrade to Tier 2 24

Ill Health Requests from Deferred Members • You may receive requests for deferred ill health pension from: - Former employees - Active employees who have opted out of the scheme - Employees who are current members but also have a deferred pension • This is your decision - not a Fund decision • Can only receive unenhanced benefits 25