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The Treasury-led review published by the chief secretary, Andrew Smith, says much more needs to be done to reduce t...
The Treasury-led review published by the chief secretary, Andrew Smith, says much more needs to be done to reduce the incidence of ill health retirement across around 4 million employees in the public sector.

Its 36 recommendations include:

employers should have active procedures and measures for

managing sickness absence bolstered by effective

policies to promote health in the workplace

redeployment is always considered when existing duties

are contributing to an employees' ill health

ill health retirement should only be granted when an

employee is incapable of working until normal

pensionable age

inability to carry out existing duties is too narrow a

test for an ill health pension

greater consistency and rigour is required in the

medical assessment process

Service Delivery Agreements agreed in the 2000 Spending

Review should set targets for reductions in ill health


The report shows ill health retirement:

costs the taxpayer£1bn a year

runs at 22,000 a year

peaked in the mid - 1990's at 40,000 a year, but is

still at historically high levels

varies widely both between the rates in different

sectors and between employers in the same sector

Mr Smith said: 'Early retirement should be available on genuine medical grounds where there are good reasons, but levels are higher than they should be. We are determined to bring them down to deliver a fair deal for the taxpayer and the people who depend on public services.

'The overall rate of medical retirement is higher in the public sector than in the private sector. And the variations in rates between sectors, and between employers in the same sector, are so significant that there is clearly scope to bring the rate down. This will help employees as well by ensuring employers adopt best practice to protect their health.

'The report sets out thirty six recommendations for tackling this issue. It is important that they are followed through vigorously across the public sector. Ill health retirement costs the taxpayer£1bn each year. We need to divert those resources which are used unnecessarily to fund medical retirements to front line services.

'I have asked departments to draw up action plans for each sector implementing the recommendations. Targets will be set challenging the employers with the highest rates to reduce these to match those of the best in their sector.'


The report found that some important steps have been taken to address ill health retirement levels in areas such as local government, the fire and police services, as well as important changes having being made to the NHS and teachers pension schemes; but more needed to be done.

It found that there were very wide variations both between the rates in different sectors and between employers in the same sector. For example, ill health typically accounts for 39% of all retirements in the police service and local government, compared to 22% in the civil service. And within the fire service, rates of early retirement on ill health grounds varied between 11% for some fire authorities to

93% in others.

It was against this background that the previous chief secretary, Alan Milburn announced a wide ranging review on 5 August 1999. It was overseen by an Inter-Departmental Group of officials chaired by the Treasury. Its terms of reference were:

'To review the factors leading to ill health retirement, including why its incidence is much higher in some parts of the public sector and in some employing authorities than others;

'To identify best practice both in the management of pension scheme provisions and the operation of relevant human resource policies; and

'To make recommendations to ministers on the implementation of measures to spread best practice and to ensure the appropriate use of ill health benefits.'

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