Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Ill-health early retirement definition

What does Ill-health early retirement mean? Ill‑health early retirement describes payment of occupational pension benefits before a member’s normal pension age/date on medical grounds, typically where ill health or disability makes the member permanently incapable of continuing their job. The expression is descriptive and used across pension and employment contexts. In practice, the controlling criteria are set by scheme rules and the tax framework. In the UK, early payment before the normal minimum pension age is only authorised for tax purposes where a registered medical practitioner certifies incapacity to carry on the member’s occupation and the member has ceased that work; separate rules apply to “serious ill‑health”...

Ill-health early retirement in UK occupational pension schemes: trustee and employer decision-making, discretion, medical evidence, communications, challenges, and serious ill-health lump sums

Published by a LexisNexis Pensions expert

Practice notes

THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES

The scheme Rules

Within trust-based occupational pension schemes, provisions for Ill-health early retirement usually place decision-making responsibility with the trustees, the sponsoring employer, or both acting together. The precise role can differ from scheme to scheme, and the language used may require careful interpretation to apply correctly.

In some schemes, the role is confined to determining whether the ill-health test set out in the rules is met.
In others, there is a discretionary element in deciding whether to grant an ill-health pension to a member.

Because definitions and scope vary, uncertainties may arise when construing these provisions. For further information, see Practice Note: Ill-health early retirement—Interpreting the scheme rules. The identified decision maker must evaluate every application on a case-by-case basis, taking into account the specific facts presented.

The ill-health rule

On receipt of an application for ill-health early retirement, the decision maker should first review the relevant provisions in the scheme’s governing documents. It is essential to establish who has the authority to decide whether a member is to be awarded ill-health early retirement benefits...

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Wyn Derbyshire

gunnercooke LLP

Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also...

Web page updated on 21/05/2026

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