Press release: NHS Employers and NHS trade unions agree new ill health retirement arrangements
31 Mar 2008
NHS Employers and NHS trade unions have agreed a set of new arrangements to help manage sickness absence and ill health retirement in the NHS.
The new arrangements encourage a proactive approach to managing long term sickness absence and keeping staff in work. They aim to emphasise the crucial role that rehabilitation and redeployment play in helping to avoid unnecessary and premature ill health retirements. They also recognise that ill health retirement benefits should depend on the severity of the applicant's condition and the likelihood of them being able to work again.
David Jordison, Management Side Chair for the review, said:
"These new provisions allow ill health retirement benefits to be distributed more appropriately on the basis of need. The management of sickness absence within the NHS is challenging, but the revised arrangements provide real opportunities to improve overall health and wellbeing in the workplace. This will help to support service improvements for patients."
Richard Parker, Staff Side Chair for the review, said:
"NHS staff will benefit as the emphasis is for NHS managers to communicate with staff when they are off sick and seek to offer them ways and means of getting back to work. When a return to work is not possible, the pension provisions will support those staff who will not be able to work again. This gives NHS managers a clear system for making prompt and appropriate decisions about staff when they are off sick."
The new arrangements include:
* The introduction of a two-tier system for ill health retirement benefits, with those unlikely to ever work again due to ill health receiving greater benefits than those who have a reasonable prospect of finding alternative work
* Minimum standards for employers on the management of sickness absence ensuring employers support staff who are off sick, offering options including phased return, redeployment to another job and access to support services to help them get them get back to work
* Scope to reinstate sick pay when entitlements have been exhausted where, exceptionally, employers have not reached an appropriate outcome for staff on long term sickness absence.
The new arrangements come into effect from 1 April 2008.
Notes for editors
* Further information can be found here . The new ill health arrangements affect NHS staff working in England and Wales.
* Changes to the NHS Staff Council terms and conditions handbook affect NHS staff on a UK-wide basis. Ministerial approval has been granted for England, Wales and Scotland, with the necessary approvals expected shortly from the Northern Ireland Health Department.
* The review was carried out by NHS Employers in partnership with the NHS trade unions on behalf of the Department of Health and the National Assembly for Wales, as part of the main NHS Pension Scheme review.
* Negotiations on the NHS Injury Benefit Scheme have yet to be concluded. The review partners propose to restart negotiations to reach agreement on a set of recommendations for change once the ill health retirement benefit and sickness absence arrangements have been implemented on 1 April 2008.
* The review aimed to develop a recharging mechanism so that employers would meet the cost of ill health retirement, costs which are currently met in full by the NHS Pension Scheme. As no clear preferred option was identified through the consultation, it has been agreed that further exploration of the financial impact of the proposals is needed before a final decision on the way forward is taken.
* The review partners have agreed that this work will be progressed through the NHS Pension Scheme governance group. It is expected that any new arrangements will be implemented from April 2009 at the earliest.
* Under the old system, staff receive the same benefit regardless of whether or not they are likely to find alternative work. If they retire on grounds of ill health, they are entitled to additional years of service, (e.g. their years of service are doubled if they have worked in the NHS for between five and 10 years, and increased to 20 years if they have worked for more than 10 years or increased by 6.66 years, whichever is greater).
* Under the new system, staff retiring under tier 1 (those permanently unable to do their own job) will receive a pension based on the number of years they have actually contributed to the scheme (but it will not be reduced for taking their pension earlier than the normal pension age). Those retiring under tier 2 (staff permanently unable to do any job), will receive a pension based upon the number of years they have contributed to the scheme, plus a two-thirds prospective service enhancement of those years until normal retirement age.
Worked example of new arrangements If someone with a normal pension age of 60 retires on ill health grounds at the age of 45 after contributing to the NHS Pension Scheme for 10 years, their benefit would be based on 10 years' service for tier 1 and 20 years for tier 2 (10 plus two thirds of 15 (number of years left until normal pensionable age).
The number of years is then used to calculate the pension, e.g. 10/80ths of the final salary plus a one off lump sum of three times the annual pension (tier 1) or 20/80ths of the final salary plus a one off lump sum of three times the annual pension (tier 2).
Examples of how the new arrangements will work in practice are available here.
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