NHS Scotland Pension Scheme ill health retirement provisions: FOI release

Information requested

I am writing under the Freedom of Information (Scotland) Act 2002 to request the following information regarding NHS Scotland Pension Scheme ill health retirement provisions:

1. 2008 Section Ill Health Retirement Calculation - Please provide the formula and methodology used to calculate the pension benefits for a member retiring on ill health grounds under the NHS 2008 Pension Scheme, including how service is enhanced for Tier 2 awards. I need the exact calculation method.

2. 2015 CARE Scheme Ill Health Retirement Calculation - Please provide the formula and methodology used to calculate the pension benefits under the NHS 2015 Pension Scheme in the case of ill health retirement, including how Tier 2 enhancement is applied. I need the exact calculation method.

3. Impact of Post-Retirement Employment on Tier 2 Awards - Under current SPPA policy and regulations, if a member in receipt of a Tier 2 ill health pension returns to part-time work in a different role (not comparable to the role from which they were retired), and earns above the Lower Earnings Limit (LEL), does this automatically trigger a reassessment or reduction of the Tier 2 award to Tier 1, even if the work is less demanding or lower paid? Can discretion be used to remain on Tier 2?

4. Treatment of Sick Leave in Final Pay and Service Calculations - If a member was on extended sick leave at reduced or nil pay prior to ill health retirement, how is this time treated in the final pay calculation and pensionable service count for:

• The 2008 scheme?
• The 2015 scheme?

5. Correction of Incorrect Final Pay Submitted by Employer - If an employer incorrectly submitted a non-pensionable figure (e.g. cumulative superannuation figure rather than actual final salary), what is the SPPA’s process for correcting this and how does it affect pension backdating or arrears?

6. McCloud Remedy and Tier 2 Ill Health Retirees - For a member who retired on Tier 2 grounds during the McCloud remedy period (2015–2022), how is the member’s ill health enhancement and pension calculated under the:

• Legacy (2008) scheme?
• 2015 CARE scheme? What choice (if any) does the member have, and when/how will they be informed?

7. Tier 2 Abatement/Reassessment Policy - Please provide the SPPA’s full policy or guidance on abatement or reassessment of Tier 2 pensions, including:

• Triggers for review (e.g. earnings above LEL, type of work)
• What evidence is considered in determining whether someone is capable of “similar work” or not
• Whether any formal re-assessment process occurs before a move from Tier 2 to Tier 1 is made

Response

1. The calculation methodology is outlined in the applicable statutory scheme regulations, which are the NHS Superannuation Scheme (2008 Section) (Scotland) Regulations 2013 and which can be accessed at the following link: https://www.legislation.gov.uk/ssi/2013/174/contents

Tier 2 benefits are referred to as Upper Tier benefits in the NHS Superannuation Scheme (Scotland) and Tier 1 benefits are referred to as Lower Tier. In the 2008 Section, Upper Tier enhancement is limited to a maximum of 45 years’ service and is calculated as follows:

whole time enhancement (up to 2/3rds of prospective membership to Normal Pension Age)
---------------------------------------------------------------------------------------	X	part time service to DoR
whole time service to date of retirement (DoR)

Lower Tier Ill Health benefits would be based on the accrued pension to date, without enhancement and with no early retirement reductions applied.

2. The calculation methodology is outlined in the applicable statutory scheme regulations, which are the NHS Pension Scheme (Scotland) Regulations 2015 and which can be accessed at the following link: https://www.legislation.gov.uk/ssi/2015/94/contents

Below is the method used to calculate Upper Tier Ill Health benefits in the CARE scheme:

(F) Total pension value at DOR

(G) Days between the day after date of retirement and the 2015 NPA Date x 50%

(H) Qualifying days in the scheme

(F) x (G+H) = 2015 Upper Tier pension H

Lower Tier ill health benefits would be based on the accrued pension to date, without enhancement and with no early retirement reduction applied.

3. Members awarded Upper Tier Ill Health benefits that return to work, in or out with NHS, and earn above the Lower Earnings Limit (LEL) will have their pension reduced to Lower Tier. There are no provisions for discretion in the regulations. Information on LEL can be found here: Earnings thresholds | The Pensions Regulator Also, members awarded Upper Tier cannot work for more than 12 months in the NHS, members that continue to work after this 12-month period will have their benefits reduced to Lower Tier.

4. In the 2008 scheme, periods of non-pensionable days are ignored for the purposes of determining the reckonable pay in the 2008 section.

In the 2015 scheme, this is based on actual earnings. If there are non-contributing days, this would be factored into the calculation and reduce ‘H’ from question 2.

5. Where an employer notifies SPPA of updated final earnings, a revision of benefits would take place. Where arrears are due, this will be paid when the revision calculation is processed and all monies owed will be paid to the member.

6. This would be the calculations laid out in Q1.

In relation to a members choice, where the member retired during 2015-2022 on Ill Health grounds. The member would receive a quote based on Legacy only (1995 or 2008) and a quote based on both Legacy and CARE service. The member would then be able to choose between the two.

Updates on Remedy timelines can be found on our website along with the ability to sign up for updates: NHS Remedy: I'm retired | SPPA

7. Members receiving Upper Tier can only work in the NHS for 12 months. Working beyond this would automatically trigger a reduction in benefits to Lower Tier. Work done either in NHS or out with NHS whilst in receipt of Upper Tier must be under the HMRC Lower Earnings Limit or the pension will be reverted to Lower Tier.

The determination of where an individual is capable of work or similar work is undertaken by qualified medical advisors. This process involves a review of medical evidence submitted alongside the application.

The triggers above would be used in a move to Lower Tier, however members may be able to apply to have their pension re-instated to Upper Tier before they reach the normal pension age if they:

• Stop working, and
• Submit additional medical evidence supporting their application

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