PSI10.2.1 - Retirement before Normal Retirement Date: Incapacity Retirement - General

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

If an employee has to stop working because of incapacity due to long-term ill health, the employer may

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

1. treat the employee as being on indefinite sick leave until he or she either recovers, reaches NRD or retires at some earlier date, or
2. retire the employee immediately on incapacity grounds.

In the case of a. the employee remains in service (but see PSI6.4.43 for the calculation of final remuneration). The sick pay and employer contributions during this period are usually provided through a separately insured sick pay scheme sometimes referred to as a Permanent Health Insurance (PHI) Scheme (see Part 1 Section 2 PSI1.2.1).