LGPS ill health retirement calculator: Tier 1, Tier 2 and Tier 3

Last updated 27 September 2026 · By Mustafa Bilgic · Rules from the Local Government Pension Scheme Regulations 2013 and the Scottish and Northern Ireland regulations, with the Local Government Association's worked example

This page explains who qualifies, what each tier pays, how assumed pensionable pay and the enhancement are worked out, and what happens when a Tier 3 pension stops. The calculator works out your normal pension age from your date of birth, the period to it in years and days, and the pension for each tier.

The three LGPS ill health tiers

Your employer decides which tier you get, after an independent registered medical practitioner (IRMP) certifies how long you are unlikely to be capable of gainful employment. Gainful employment means paid employment for at least 30 hours a week for at least 12 months, so work of fewer hours than that does not count as gainful employment for this test.

Scotland and Northern Ireland

The Scottish and Northern Ireland schemes have no Tier 3. Tier 2 applies if you are likely to be capable of gainful employment before normal pension age, and it still adds 25% of the pension you would have built up. In Northern Ireland, NILGOSC makes the decision at the request of your employer, based on a report from its independent registered medical practitioner.

Who qualifies for LGPS ill health retirement

Regulation 35 of the 2013 Regulations applies to an active member with at least two years' qualifying service whose employer ends their employment on the grounds of ill health or infirmity of mind or body before normal pension age. In England and Wales two conditions must both be met:

• you are permanently incapable of discharging efficiently the duties of the job you were doing, where permanently means that, more likely than not, you will be incapable until at least your normal pension age; and
• you are not immediately capable of undertaking any gainful employment.

Your employer must get a certificate from an IRMP before deciding, and the doctor must not have advised on or been involved in your case before. The Scottish regulations have only the first condition. If you qualify, you are entitled to, and must take, the early pension.

How the enhancement is worked out

For Tier 1, regulation 39 adds to your pension account the pension you would have built up between the day after your employment ends and your normal pension age if you had been paid your assumed pensionable pay throughout. The build-up rate in the main section is 1/49th of pensionable pay a year, and any election to pay into the 50/50 section is treated as lapsed, so the enhancement is always at the main section rate. Tier 2 adds one quarter of that amount. The pension is then paid as if you had reached normal pension age on your leaving date, so it is not reduced for early payment.

The Local Government Association's training for employers sets the formula out as the period from the date of leaving to normal pension age, multiplied by 1/49 and by assumed pensionable pay. It counts the period in years and days, and the calculator counts the days as a fraction of 365, which reproduces the LGA's figures to the penny.

Assumed pensionable pay

Assumed pensionable pay (APP) is set by regulation 21. If you are paid monthly it is the pensionable pay you received in the three months before the pay period in which you retire, less any lump sums, grossed up to a yearly figure, with any regular lump sum from the previous 12 months added. If you are not paid monthly, the last 12 weeks are used. The LGA's example is a member paid £1,600, £1,630 and £1,630 in the last three months with a regular £1,500 bonus: £4,860 divided by 3 and multiplied by 12 is £19,440, plus £1,500 gives £20,940.

If your pay in that period was materially lower than you normally received, your employer can use a higher figure, having regard to your pay over the previous 12 months. The member website adds that a drop in pay because you were away for sickness or injury is generally ignored, and that if you cut your hours because of the condition that led to your retirement, APP is worked out on the pay you would have received on your usual hours.

Normal pension age

Your LGPS normal pension age is your State Pension age, or 65 if that is later. State Pension age is 66 for people born from 6 October 1954 to 5 April 1960 and is rising to 67 between 2026 and 2028, reached at 66 and a number of months for people born between 6 April 1960 and 5 March 1961. It is 67 for people born from 6 March 1961 to 5 April 1977, and under the Pensions Act 2007 it rises to 68 between 2044 and 2046 for people born after that. The calculator uses this GOV.UK timetable, so a later change in the law would change the result; you can enter the date from your own statement instead.

What happens with a Tier 3 pension

Tier 3 pays the pension you have built up, without an enhancement and without a reduction, for no more than three years. It stops earlier if you start employment that your former employer decides is gainful employment, and you must tell the employer about any job while it is paid. The employer must review it after 18 months, with a further IRMP certificate, and can continue it, stop it, or move you up to Tier 2 from the date of the review. If Tier 3 stops you become a deferred pensioner member, and your pension normally becomes payable again from normal pension age. Within three years of Tier 3 stopping, your former employer can still award Tier 2 if, after a further IRMP certificate, it is satisfied that you meet the conditions. If you reach normal pension age while Tier 3 is being paid, it carries on.

Lump sum, added years and special cases

• Lump sum: membership before 1 April 2008 brings an automatic lump sum of three times the pension for that period. You can also give up pension for a lump sum at £12 for every £1 of yearly pension, up to 25% of the capital value of your benefits.
• Extra pension you were buying: if you retire on Tier 1 or Tier 2, you are credited with all the extra pension you set out to buy through Additional Pension Contributions, even if you had not finished paying, and with the whole extra period of added years you were buying.
• A second ill health retirement: if you had Tier 1 before, a later enhancement is not added; after an earlier Tier 2, the enhancement is limited to 75% of the years from the first ill health retirement to normal pension age, less the years of membership since.
• Protection for older members: if you were paying in on 31 March 2008, were 45 or over then and have been in continuous membership, your fund checks that the enhancement is at least what the pre-2008 rules would have given.
• McCloud remedy: if you qualify for underpin protection, your fund works out whether an addition is due for the pension built up from 1 April 2014 to 31 March 2022 when you take your pension.

If you have already left

If you left with a deferred pension and later become permanently incapable of the job you had when you left, and are unlikely to be capable of gainful employment before normal pension age or for at least three years, whichever is sooner, regulation 38 lets you ask your former employer for early payment at any age. The employer must obtain an IRMP certificate first. The pension is paid without reduction but with no enhancement, because regulation 39(4) pays the pension you would have had at normal pension age on that date.

Worked example

The LGA's example member retires on 9 November 2022 and reaches normal pension age, 67, on 3 December 2042, a period of 20 years and 24 days. She has built up £7,538 a year and her assumed pensionable pay is £21,548. At Tier 1 the enhancement is 20 years and 24 days x 1/49 x £21,548 = £8,824.02, so she receives £16,362.02 a year for life. At Tier 2 it is 25% of that, about £2,206, for a pension of about £9,744 a year. At Tier 3 she receives £7,538 a year for no more than three years.

Sources and methodology

The calculator applies regulation 39 with the LGA's years-and-days method, the State Pension age timetable published on GOV.UK and the tier fractions in each nation's regulations. It reproduces the LGA's Tier 1, Tier 2 and Tier 3 examples and its assumed pensionable pay example, and was tested on the State Pension age boundaries. It does not apply the second ill health retirement restriction, the pre-2008 protection or the McCloud underpin, which your fund checks.

• Local Government Pension Scheme Regulations 2013, regulations 21, 23, 33 to 39 and Schedule 1, on legislation.gov.uk.
• Ill health retirement for active members, employer training, Local Government Association (PDF).
• Ill health retirement, LGPS member website (England and Wales), and LGPS Scotland.
• Local Government Pension Scheme (Scotland) Regulations 2018, regulations 34 and 37, and Local Government Pension Scheme Regulations (Northern Ireland) 2014, regulations 36 and 39, on legislation.gov.uk; NILGOSC.
• State Pension age timetable, GOV.UK.

Frequently asked questions

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