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Pensions

Volume 451: debated on Wednesday 8 November 2006

To ask the Chancellor of the Duchy of Lancaster (1) what the arrangements are for the payment of pensions to people who retire early through ill-health in each pension scheme for which her Department is responsible; what the incidence of ill-health retirement was as a percentage of all retirement in such schemes in each year since 1988-89; and if she will make a statement; (96020)

(2) what the current rate of ill-health retirement is for each public sector pension scheme for which her Department is responsible; and if she will make a statement.

The Cabinet Office participated in the inter-departmental review of ill-health retirement in the public sector, the report of which was published by Her Majesty’s Treasury in May 2000. The civil service’s approach to the recommendations of this report was set out in an action plan which included the setting of ill-health retirement targets for participating Departments. These targets required Principal Civil Service Pension Scheme (PCSPS) employers to reduce ill-health retirement rates, by 2005, to no more than 3.72 per 1,000 staff; a higher rate of 4.84 per 1,000 staff was set for the Prison Services. Active management by employers resulted in the target being met and, for the year to Friday 31 March 2006, the overall ill-health retirement rate for employers generally was 1.76 per 1,000 staff and the rate for the Prison Services was 3.40 per 1,000 staff.

The PCSPS provides ill-health pensions to members who are assessed by the scheme’s independent medical adviser as being permanently incapable, by reason of ill-health, from carrying out their job. Qualifying members receive their accrued pension benefits paid immediately on an unreduced basis. Additionally, depending on the section of the scheme the member belongs to, the individual’s length of service and the severity of their incapacity, reckonable service may be enhanced. The introduction of new pension terms for new entrants from October 2000 provided an opportunity to differentiate between those whose breakdown in health renders them incapable of any gainful employment and those who are incapable of carrying out their own job.

Most civil servants joining the civil service on or after 1 October 2002 can, as an alternative to joining the PCSPS, opt for a partnership pension account which is a stakeholder arrangement with an employer contribution. The conditions for ill-health retirement are as for members of the PCSPS but the member receives a lump sum of 20 per cent. of pay per year of service rather than an ongoing annual pension.

Information about the number of members who retire early on the grounds of ill health as a percentage of all retirements for the Principal Civil Service Pension Scheme for the period from October 2002 onwards is shown in the following table.

Period

Ill health retirements as a percentage of total retirements

October 2002-March 2003

12.6

2003-04

10.7

2004-05

10.0

2005-06

7.2

Comparable data for periods before October 2002 are only available at disproportionate cost. Information on ill health retirement in the civil service, alone (excluding non-civil service bodies which participate in the PCSPS) for the period to 2001-02 is available for each year in the annual publication Civil Service Statistics which is available on the Cabinet Office website at:

http://www.civilservice.gov.uk/management/statistics/publications/index.asp

Copies are also available in the Library for the reference of Members.