Ill Health Early Retirement Benefit

Ill health early retirement benefit

Designed to help companies de-risk, budget and plan ahead for the unpredictable liability of early retirement payments if a pension scheme member retires early due to permanent ill health.

A lump sum payment is made to the trustees of the pension scheme for each valid claim. The pension scheme trustees arrange for the ill health pension payments to be made to the member.

Key documents

PDF file: Ill Health Early Retirement Benefit technical guide PDF size: 2647 KB

PDF file: Ill Health Early Retirement Benefit proposal form PDF size: 7743 KB

PDF file: Ill Health Early Retirement Benefit claim form PDF size: 1218 KB

Product details


Minimum policy size	From 100 employees.
Maximum policy size	No maximum.
Policy options	The full cost or partial cost to the pension scheme as a result of an employee retiring early due to ill health can be covered. This is referred to as the strain cost.
Benefit categories	Employees can be grouped into separate categories and there can be different benefit basis between categories.
Employee eligibility	Active members of the pension scheme. Employees must be included for cover as soon as they are eligible.
Cover duration	Cover for a member of the pension scheme ends when a payment has been made following a valid claim.
Maximum cover	£2 million or the strain cost to the pension scheme if that is lower.
Free limit	Our quote will show a free limit, which is the maximum amount of cover we can provide before we ask for medical evidence. The free limit amount depends on the number of employees and the amount of cover.
Exclusions	For policies with less than 1,000 employees we will apply a pre-existing condition exclusion for cover up to the free limit. This means we won’t pay benefit in relation to an employee whose permanent incapacity results from an injury or illness they were suffering from either at the date they were covered by the policy or were diagnosed with or displaying symptoms of within the two years before their cover began.
Benefit end date	Usually the normal pension scheme age under the pension scheme rules. Alternatively, it can be the state pension age.
Cover during temporary absence	If an employee is absent due to illness or injury, we’ll continue to cover them up to the date they’re eligible to receive an ill health early retirement pension or the benefit end date. If an employee is absent for another reason, such as a sabbatical, we’ll continue cover for one year.
Cover for overseas employees	Considered on an individual basis with advance notice.
Claims history discount	We consider past claims when working out the cost of cover.