While you might feel as if you are too unwell to teach, there are qualification criteria for ill-health retirement. There is a two-tier ill-health pension that reflects the severity of your illness. Much depends on whether you are making your application in or out of service. It also depends on whether your illness is severe enough to count out employment in the future.
What is tier 1 ill-health benefits?
Tier 1 benefits are based on your accrued benefits within the Teachers’ Pension Scheme. If you are assessed as meeting the criteria for an incapacity condition and are considered permanently incapable of work, you qualify for this level of ill-health benefits. It means you are unlikely to return to teaching due to your ill-health before your normal pension age but you are capable of undertaking other work up to your NPA.
What is tier 2 ill-health benefits?
There is a further enhancement to the ill-health benefits for those permanently unable to undertake any form of employment. It is known as Total Incapacity Benefit in the 2010 Final Salary arrangement and the Total Incapacity Pension in the 2015 Career Average arrangement.
The wording within this regulation is “gainful employment”, which has a specific meaning. ‘Gainful employment’ refers to wording in the regulations whereby a person’s ability to carry out any work is impaired by more than 90% and is likely to be impaired by more than 90% permanently
How will you know which tier you are?
During your assessment for an ill-health pension, your advisor will decide what tier you fall into. For instance, if you are given a prognosis of a terminal illness, you are likely to fall into tier 2. If you could receive appropriate medical treatment that would reverse the illness, you may be placed in tier 1. It is possible to move between tiers should your prognosis change.
The consequences of being judged tier 1 or tier 2 will depend on the time of your employment and the arrangement you are in. If you need to understand the financial impact of your diagnosis and prognosis, you may wish to speak to an independent financial advisor.
The content in this article was correct on October 31st 2021. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.