| [Para 2(4)(a), Sch 28] |
A
scheme pension may be paid on ill-health grounds
only where the
scheme administrator has evidence from a
registered medical practitioner that the person is not only unable
to carry out their current occupation, but will not be capable of
returning to that occupation at a future date. A scheme pension
paid on ill-health grounds may be paid at any time, including for
example, before normal minimum pension age, though a member could
also become entitled to a pension on ill-health grounds after this
point. Any ill-health pensions which were already in payment on 5
April 2006 will be treated as if they met these criteria and will
not need to meet any additional tests.
Where an entitlement to a scheme pension arises on the basis
of the individual’s ill-health, including those already in
payment on 5 April 2006 the tax rules allow such a pension to be
reduced or even stopped at any time. After such a change it may
later recommence or increase back to the earlier rate or to some
intermediate amount. Usually scheme rules will only take advantage
of such a facility in order to provide a level of pension
appropriate to the member’s capacity to resume their
occupation. Whether the scheme’s provisions do this, and to
what extent, whether it is automatic or dependant upon the
administrator’s discretion, will depend on the rules of the
particular scheme concerned.
If a scheme pension paid on ill-health grounds is reduced in
accordance with this relaxation and the reduction is part of what
the legislation calls ‘avoidance arrangements’, the
member will become liable to an additional
unauthorised payments charge on a defined
‘appropriate amount’.
RPSM09101600 explains what the
legislation means by ‘avoidance arrangements’ and the
‘appropriate amount’.
For the avoidance of doubt, where the scheme pension is to
return to its former level or re-commence the scheme rules may
allow this without the member needing to meet the ill health
condition again.
RPSM11104460 explains how this
re-commenced scheme pension will be treated for
lifetime allowance purposes.
| Glossary ( RPSM20000000) |
