Teachers' Pension ill health retirement calculator: Tier 1 and Tier 2
Last updated · By Mustafa Bilgic · Rules from the Teachers' Pension Scheme Regulations 2014, the Teachers' Pensions Ill-health Retirement guide and SPPA guidance for Scotland
This page explains the two tiers, who qualifies, how Teachers' Pensions works out the enhancement and the lump sums, and what happens if you work again. The calculator uses your dates, salary and the pension on your statement to estimate the pension for either tier, the largest lump sum and the serious ill health lump sum.
The two tiers of Teachers' Pension ill health retirement
Your incapacity must be expected to last until normal pension age or beyond. The Scheme's medical advisers look at the evidence you send and recommend whether you meet the criteria, and Teachers' Pensions makes the decision. The medical advisers recommend first whether you qualify for accrued benefits and then whether enhanced benefits can be awarded.
| Level | Who it is for | What you get | When it stops |
|---|---|---|---|
| Tier 1 | Permanently unfit to teach despite appropriate medical treatment, but able to do other work | The pension you have built up, paid now with no reduction for early payment and no enhancement | If you go back to any teaching work, paid or unpaid, before normal pension age |
| Tier 2 | Also unable to do any work: your ability to work is impaired by more than 90% and is likely to stay so permanently | The Tier 1 pension plus the total incapacity enhancement: half of the service you could have completed to normal pension age | The enhancement stops if the 90% test is no longer met, for example when you start work, unless you have reached normal pension age |
| Out-of-service application | You apply more than two years after leaving pensionable service, or you left for a reason other than ill health | The pension you have built up only, and only if you meet the total incapacity condition | As for Tier 1 |
Teachers' Pension ill health calculator
Tier 1 or Tier 2 pension from your dates, salary and statement
Run by Teachers' Pensions for the Department for Education.
Leave the normal pension age date blank to work it out from your date of birth: your State Pension age under current law, or 65 if later.
Who qualifies
You can apply at any time in your career if you are under the normal pension age for the benefits you want to take and have at least two years' qualifying service. Regulation 107 of the 2014 Regulations sets the two tests. You meet the incapacity condition if illness or injury makes you unfit to be in eligible (teaching) employment despite appropriate medical treatment and this is likely to be permanent. You meet the total incapacity condition if, in addition, your ability to carry out any work is impaired by more than 90% and is likely to stay impaired by more than 90% permanently.
An application counts as in service, and can bring the enhancement, if you are still under a contract with your employer or you apply within two years of leaving pensionable service, having left because of the same or a connected illness. If you apply later, or you left for another reason, it is an out-of-service application: you need to meet the total incapacity condition and you get only the benefits you have built up.
You have to provide the medical evidence, and you or your employer pay any fees for it. Teachers' Pensions expects a report from a specialist involved in your care. The medical advisers will not look for extra evidence, and they recommend rejecting an application that is not supported by evidence showing the criteria are met.
How the total incapacity enhancement is worked out
Regulation 117 sets the annual rate of the total incapacity pension at half of your prospective service multiplied by your annual rate of pensionable earnings divided by 57. Prospective service is the period from the day after the entitlement day to the day you would have reached normal pension age, counted in years and fractions of a year. Teachers' Pensions uses your current full-time equivalent annual rate of pensionable earnings, so part-time teachers get an enhancement worked out as if the post were full time. Since 1 April 2022 every application is in the career average scheme, and the same 1/57 formula applies even if you also have final salary service.
| Scheme | Enhancement formula |
|---|---|
| Career average scheme (every application from 1 April 2022) | Half of the service to normal pension age x full-time equivalent pensionable earnings / 57 |
| Final salary scheme, normal pension age 60 (earlier applications) | Half of the service to normal pension age x final average salary / 80, with a lump sum of three times the extra pension |
| Final salary scheme, normal pension age 65 (earlier applications) | Half of the service to normal pension age x final average salary / 60 |
The entitlement day is the latest of the date you became incapacitated, the day after you left all teaching employment, and the day six months before the date of the last medical report used to accept your application. The calculator assumes it is the day after your last day of pensionable service.
If your employer cut your salary because of your illness while you were in the career average scheme, a stepping down election lets the enhancement use your full-time salary from before the cut, increased in line with inflation, if that is higher. You need to make the election and provide medical evidence from the time of the change.
Normal pension age
In the career average scheme, the permanency test and the enhancement run to a normal pension age equal to your State Pension age, or 65 if that is higher. State Pension age is rising to 67 between 2026 and 2028, and under the Pensions Act 2007 it rises to 68 between 2044 and 2046 for people born after 5 April 1977. The calculator follows the GOV.UK timetable under current law, so a later change in the law would change the result. You can type the date from your own statement instead.
Lump sums
If you have final salary pension in the NPA 60 section, you also get an automatic lump sum of three times that pension. There is no automatic lump sum in the NPA 65 section or in the career average scheme, but you can give up pension for a lump sum at £12 for every £1 of yearly pension. The largest lump sum you can take is 25% of the total value of your benefits, where every £1 of yearly pension is valued at 20. The actual pension and lump sum figures come with the letter accepting your application, and you cannot change the amount once the payment has been authorised. The calculator shows the largest lump sum and the pension left after it.
Serious ill health lump sum
If a registered medical practitioner certifies that your life expectancy is less than one year, you can ask for the whole pension to be paid as a one-off tax free lump sum. You must ask for it when you apply for ill health benefits, because a pension cannot be converted once it is being paid. Teachers' Pensions works it out as the largest lump sum after converting pension, plus five times the pension that is left. Taking it ends your pension in the scheme, although pensions for an adult or children can still be paid after your death.
Compare it with the death grants before you decide. An in-service death grant of three times your salary is payable while you are an active teacher, and for up to 12 months after leaving pensionable service because of ill health, unless you have become entitled to a pension in the meantime. Teachers' Pensions recommends independent financial advice. If you have one to two years' qualifying service and a life expectancy of less than 12 months, a short service serious ill health grant may be paid instead: in the career average scheme it is two months' final pensionable earnings, or all your contributions plus 3% compound interest if higher. You must apply within six months of leaving pensionable employment.
If you work again
Tier 1 and Tier 2 benefits stop if you return to any paid or unpaid teaching work before normal pension age, and you must tell Teachers' Pensions straight away. The enhancement also stops if you take up any other work, unless you send a certificate from a registered medical practitioner and Teachers' Pensions is satisfied that you still meet the total incapacity condition. Enhanced benefits continue in a support role only on that basis, while a Tier 1 pensioner may be able to take such a role.
Scotland
Teachers in Scotland are in the Scottish Teachers' Pension Scheme, run by SPPA. Partial Incapacity Benefits are paid if you are permanently unable to teach but able to do other work, and Total Incapacity Benefits if your ability to carry out any work is also impaired by more than 90% permanently. Regulation 114 of the Scottish Regulations uses the same formula as England and Wales: half of your prospective service multiplied by your annual rate of pensionable earnings divided by 57. SPPA says deferred members are paid at the Partial Incapacity Benefits level, and that the terminal illness lump sum is five times your annual pension. The calculator works out the pension for Scottish members but leaves lump sums to SPPA.
Final salary members and the McCloud remedy
The final salary scheme closed to new contributions from 1 April 2022, when all members moved to the career average scheme. If you had service in the remedy period, 1 April 2015 to 31 March 2022, and were affected by transitional protection, your application can be assessed under both the career average and the final salary rules. HMRC's guidance explains that remedy period service has been moved back to the legacy scheme and that you choose legacy or new scheme benefits for that period when you retire.
Worked example
The Teachers' Pensions guide takes a member aged 45 with pensionable earnings of £30,000, 22 years from normal pension age at 67, a career average pension of £5,000 and a final salary (NPA 60) pension of £7,000. The enhancement is £30,000 x 22/57 x 0.5 = £5,789.47 a year, so a Tier 2 pension is £17,789.47 a year, with the £21,000 automatic lump sum from the final salary part. With a life expectancy of less than a year, the guide puts the serious ill health lump sum at £146,545.86, against £103,124.92 without the enhancement. The calculator reproduces these lump sums to within 20p: the guide divides by 4.6667 where the 25% rule gives 14/3.
Sources and methodology
The calculator applies regulation 117 with the period counted in whole years and days, the days as a fraction of 365, as in the Teachers' Pensions examples. It works out normal pension age from the GOV.UK State Pension age timetable and applies the Teachers' Pensions lump sum method. It reproduces the guide's enhancement, lump sum and serious ill health figures. It does not model stepping down, added pension, the McCloud remedy choice or a Scottish lump sum.
- Teachers' Pension Scheme Regulations 2014, regulations 107, 110, 113 and 116 to 118, on legislation.gov.uk.
- Ill-health retirement, Teachers' Pensions, with its Ill-health Retirement guide and the employer guidance.
- Your guide to ill-health retirement, SPPA, and the Teachers' Pension Scheme (Scotland) (No. 2) Regulations 2014, regulation 114, on legislation.gov.uk.
- Public Service Pensions Act 2013, section 10, and the State Pension age timetable on GOV.UK.
- Chapter 1 pension scheme guidance (McCloud remedy), HMRC on GOV.UK.
Frequently asked questions
What are Tier 1 and Tier 2 in the Teachers' Pension Scheme?
Tier 1 is for teachers who are permanently unfit to teach but can do other work: it pays the pension built up so far with no reduction. Tier 2 is for teachers whose ability to do any work is also impaired by more than 90% permanently: it adds the total incapacity enhancement. In Scotland they are called Partial and Total Incapacity Benefits.
How is the Tier 2 enhancement calculated?
Teachers' Pensions takes half of the service you could have completed between the entitlement day and normal pension age, multiplies it by your full-time equivalent annual rate of pensionable earnings and divides by 57. For example, 22 years to normal pension age and earnings of £30,000 give £30,000 x 22/57 x 0.5 = £5,789.47 a year.
Is a teachers' ill health pension reduced for early payment?
No. Ill health retirement lets you take your pension before normal pension age without the reduction that applies to early retirement.
Can I work after taking ill health retirement?
Not as a teacher: the pension stops if you return to any teaching work before normal pension age. With Tier 1 you may take other work. With Tier 2 the enhancement stops if you work, unless a registered medical practitioner certifies, and Teachers' Pensions accepts, that you still meet the total incapacity condition.
What is the serious ill health lump sum?
If your life expectancy is certified as less than one year, you can ask for the whole pension as a one-off tax free lump sum when you apply. Teachers' Pensions works it out as the largest lump sum after converting pension plus five times the pension left. It ends your pension in the scheme.
Can I apply after I have left teaching?
Yes. If you left because of ill health and apply within two years of leaving pensionable service, the application is treated as in service and can bring the enhancement. Later applications are out of service: you need to meet the total incapacity condition and you get the pension built up so far, with no enhancement.