Different providers and scheme administrators will have different requirements and forms to complete, so it’s best to check what the scheme may want or need beforehand.
Getting the right information for the scheme will mean being able to present a full case to the scheme administrator first time - rather than going back to the client to ask for further information.
As the client is in ill health they probably wouldn’t appreciate several requests for details and evidence.
The medical practitioner has to be a fully-registered person within the meaning of the Medical Act 1983.
However, this isn’t always a straightforward requirement to meet.
Over the past few years we have seen the rise of online medical services, where someone can consult with a General Medical Council (GMC) registered doctor by video or text chat.
Sometimes people may ask to take early retirement ill health benefits following an online consultation.
Usually the person requesting ill health benefits would have already had several medical appointments over the past few weeks and months, if not years.
So it seems strange to request payment of benefits following an online consultation, and scheme administrators will probably want to investigate the circumstances further.
There are also cases where the medical evidence is signed by a medical practitioner who works overseas. Again, in these sort of cases, the scheme administrators will investigate further to make sure the overseas qualifications are robust enough.
What benefits can be paid out through early retirement?
If it is a money purchase scheme, then the benefits paid out on early retirement through ill health will be subject to what the scheme will allow, for example, tax-free cash plus flexi-access drawdown or uncrystalised funds pension lump sum (UFPLS) or an annuity.
Someone taking tax-free cash, then designating the rest of their pension fund to flexi-access drawdown could withdraw the whole remaining amount. It would though be subject to tax.
If someone decides to only partially crystalise their money purchase benefits and then subsequently take another chunk, it’s worth investigating how the scheme will view this.
Some scheme administrators will allow a further crystalisation with no more checks; others may want to see updated evidence that the individual cannot carry out their current occupation.
For a defined benefit scheme the scheme rules will determine the basis of the calculation of benefits, and what, if any, reduction of benefit applies.
If there is a guaranteed minimum pension (GMP) included then this can only be paid out where the revalued GMP promise is covered.
