NHS ill health retirement pays your pension early when illness ends your job, and the Tier 2 top-up is worked out differently in the older sections and the 2015 Scheme.
Which section your service sits in changes both the eligibility age and the size of any top-up. Here the form on this page earns its place: an FCA-authorised adviser phones and sorts through it with you, uncharged. Pensions staff at your employer and the NHS Business Services Authority (NHSBSA) can answer questions about your own record without charge.
Who is eligible for NHS ill health retirement?
NHSBSA, which runs the scheme in England and Wales, sets three tests: you need "a pension member for a minimum 2 years", you must be "under the normal pension age", and you must be too ill to work in your present job. That age is 60 under the 1995 Section and 65 under the 2008 Section; in the 2015 Scheme it is State Pension age, or 65 if that comes later. Your last day of membership has to fall before the birthday in question. If you are not sure which section holds your service, see which NHS pension scheme you are in.
Illness also has to be part of why you are leaving. NHSBSA says "your ill health must be one of the reasons you are leaving work", and the 2015 regulations go further: a member who is dismissed is not entitled to the pension unless the scheme manager is satisfied the dismissal was because of the infirmity, and one who simply resigns needs the employer to have told the scheme in writing that the infirmity is the reason, and the scheme to accept that. Being dismissed does not on its own lead to payment, and neither does receiving incapacity or disability benefits, because the tests differ.
Ill health also sidesteps the usual early-pension floor. Elsewhere the earliest age is 55, moving to 57 on 6 April 2028, although some people who held earlier rights before 6 April 2006 keep a lower protected pension age (see protected pension ages). HMRC lets members in ill health take benefits before that age, and NHSBSA says the minimum pension age "does not apply in the case of ill health retirement". The route for people who are not ill is covered in taking your NHS pension early.
What are Tier 1 and Tier 2?
The scheme pays at one of two levels, and the NHSBSA medical advisers decide which. Tier 1 means you are permanently unable to carry out the duties of your own job. Tier 2 means you meet that test and are also permanently unable to do regular employment of like duration, whole-time or part-time to match your NHS hours, because of illness or injury. "Permanently" here means until the section's normal pension age, not for life.
NHSBSA's guide says the medical advisers weigh whether you have had appropriate treatment, your mental and physical capacity, and the rehabilitation it would be reasonable for you to undergo. For Tier 2, the 2015 Scheme regulations say they must consider work you could do given your training and experience whether or not such a job is available, and must ignore your own preference and where you live.
How much does Tier 2 add in the 1995 and 2008 Sections?
In both older sections a Tier 1 pension is your earned pension paid without any early-payment reduction and with no enhancement. A Tier 2 pension adds an enhancement of two thirds of your prospective membership, and only the end point differs.
| Section | Tier 1 | Tier 2 adds |
|---|---|---|
| 1995 Section | Earned pension, unreduced | Two thirds of prospective membership to age 60; total membership cannot exceed what you would have had at 60 |
| 2008 Section | Earned pension, unreduced | Two thirds of prospective membership to age 65; total membership cannot exceed what you would have had at 65 |
Prospective membership is the service you would have gone on to build up before reaching normal pension age. The younger you leave, the more years there are to enhance, and the cap stops the total going past what normal pension age would have given. If you hold rights in both sections you make a separate application under each.
How does the 2015 Scheme calculate Tier 2?
In the 2015 Scheme a Tier 1 pension is again the pension already earned, paid without reduction, but the Tier 2 addition is based on one half of prospective membership to normal pension age, not two thirds. The regulation builds the addition from 50% of the period running from the day after your last day of pensionable service to the day before you reach your normal pension age, which for most people is State Pension age.
If you moved from the 1995 or 2008 Section into the 2015 Scheme on or after 1 April 2015, NHSBSA says your Tier 2 pension is made up of a Tier 1 pension for the old-section membership plus Tier 1 and the Tier 2 addition for the 2015 pension. In other words the enhancement attaches only to the 2015 part. Under the McCloud remedy, for members with no or tapered protection, service from 1 April 2015 to 31 March 2022 was returned to the 1995/2008 Scheme on 1 October 2023, and NHSBSA asks them to choose legacy or 2015 benefits for that period.
If you are deferred, meaning you no longer pay in, NHSBSA says you cannot receive a Tier 2 pension: a deferred member accepted for ill health gets benefits unreduced but not enhanced. Not sure how your split of service would be treated? Whoever rings after your form goes in can talk through your section mix for nothing.
How do you apply for ill health retirement?
Active members, and anyone who has opted out but still works for an NHS employer, ask HR or the pensions department for form AW33E. It has three parts: the employer fills in A, you fill in B, and C is the occupational health doctor's report, with a GP or specialist stepping in if that is not possible. Deferred members use AW240 instead, where a GP, hospital doctor or consultant completes part 2.
NHSBSA's medical advisers review all the medical evidence and make a recommendation, and they may ask for more. Occupational health reports are free to an active member, but a deferred member has no access to that service and pays for any evidence they obtain. Incomplete forms can be returned, which delays the claim. If you are accepted you then claim the money with form AW8 (AW8P for deferred members); nothing is paid until you do.
What if you disagree with the decision, or want a review?
There are two routes, and they work differently. If the medical adviser accepts Tier 1 but thinks it hard to judge the longer-term outlook, they can advise leave to ask for reassessment for Tier 2 within three years. You must ask in writing and send new medical evidence about the same conditions; deterioration due to ageing and unrelated new conditions do not count. A Tier 2 pension awarded this way is paid from the date of the reassessment.
If you think the decision was wrong now, you can dispute it. NHSBSA's customer guidance says you can appeal if your application was rejected or you got Tier 1 with no reassessment and believe you merit Tier 2. You send NHSBSA the Internal Dispute Resolution Stage 1 application, together with any further medical evidence, and a decision is due within 40 working days. If you are unhappy, you have six months from the date of that letter to ask for a second review. If you are disputing the tier, you can claim Tier 1 benefits meanwhile, and a successful appeal pays Tier 2 from your original payment date. The Pensions Ombudsman will normally expect you to have used these internal stages first.
Can a terminally ill member swap the pension for a lump sum?
Terminal illness is a hard time to be reading about pension forms. The Marie Curie Support Line (0800 090 2309, free to call) gives "free trusted information on terminal illness, dying and bereavement", and your pensions officer at work can help set things moving. NHSBSA says it will then name a member of its team to support the application and the payment.
Where a member is terminally ill and not expected to live longer than a year, NHSBSA says they can apply at retirement to exchange all their ill health benefits for a one-off, usually tax-free, lump sum. For tax purposes the scheme must first hold written confirmation from a registered doctor that you are expected to live less than one year. There is no minimum age for this lump sum. Your dependants' benefits are not affected, but the choice must be made before the pension is paid and cannot be changed afterwards, and a member who takes this lump sum cannot rejoin the scheme.
NHSBSA's formula converts pension up to the level giving the maximum permitted lump sum at £12 of lump sum for every £1 of pension, and any remaining pension at £5 for every £1; a basic retirement lump sum from the 1995 or 2008 Section is added. Members past normal pension age cannot apply for ill health retirement, though NHSBSA says they can still make this exchange.
Tax depends on age. For a member under 75, HMRC says there is no income tax up to the lump sum and death benefit allowance still available to them, and any excess is taxed as pension income at their marginal rate. From 75 the lump sum counts as pension income and is taxed at marginal rates. Our page on whether an ill health pension is taxable covers the ordinary pension.
Do the same rules apply in Scotland, Wales and Northern Ireland?
NHSBSA's guide and the 2015 regulations quoted above apply in England and Wales. In Scotland, the SPPA (Scottish Public Pensions Agency) administers a separate NHS scheme, with a lower tier and an upper tier; its guide for employers gives the upper-tier enhancement as up to two thirds of prospective membership for the 1995 and 2008 sections and 50% for the 2015 section, and reviews go through SPPA's own dispute procedure. See the NHS pension in Scotland. For Northern Ireland, ask the scheme administrator there which rules apply, and an adviser can help you frame the questions.
Common worries about an NHS ill health pension
Can you work after NHS ill health retirement?
Yes, but pay can reduce a pension. If you return to NHS-funded work before normal pension age, abatement may apply, and anyone earning above the National Insurance Lower Earnings Limit has a Tier 2 pension replaced by Tier 1. The detail is in working after ill health retirement.
Can you get ill health retirement with fibromyalgia or another long-term condition?
The tests turn on capacity, treatment and rehabilitation rather than a named diagnosis, so evidence of how the condition limits your work matters more than its label.
Does the pension rise each year?
NHSBSA says an ill health pension is increased each April in line with the Consumer Price Index (CPI).
How does this compare with other schemes?
Each scheme sets its own tests. See local government ill health retirement, civil service ill health retirement and the wider UK overview.
Is ill health retirement worth taking?
That turns on your other income, benefits and health outlook, which is the subject of whether it is worth it; age limits are covered separately.
Before sending in the AW33E, hearing someone else run through your leaving date, section mix and tax position may help; the quote form here brings that call from an adviser, and it costs nothing.
Sources
- NHSBSA, Applying for ill health pension benefits
- NHSBSA, Member ill health retirement benefits guide (V1A 09.2023)
- The National Health Service Pension Scheme Regulations 2015, regulations 90 to 92
- HMRC, PTM063400 serious ill-health lump sum and PTM062100 pension age
- SPPA, NHS Pension Scheme Benefits Guide for Employers
- NHSBSA, Rollback of remedy period service
- Marie Curie Support Line