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EMPLOYERS PROPOSE PENSION RESTRICTIONS

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Employers have moved to head-off criticism from the DoE and Audit Commission over the rising cost of early and ill-...
Employers have moved to head-off criticism from the DoE and Audit Commission over the rising cost of early and ill- health retirements. Proposals have been drawn up by the steering committee on local government pensions, UKSC, which recommend councils adopt stricter rules before granting ill-health retirements.

UKSC suggests that officers should only be granted an ill- health retirement after a doctor trained in occupational health has assessed their fitness for work. A final decision would then have to be ratified by a second medical assessment from a regional or national panel of medical advisers.

Check-ups on staff could then follow after they leave work to ensure their retirement on ill-health grounds was justified.

As well as introducing tougher rules, UKSC has also asked the government to introduce a cheap alternative to existing retirement packages.

Currently, there are three ways staff can retire early. They can leave on grounds of the efficient running of the service, ill health or voluntary redundancy.

They get an immediate pension, enhanced to what they would have received had they retired at the normal age. The cost to funds can be hundreds of thousands for a senior officer.

The alternative proposed by UKSC would be to let staff retire after 50 on an immediate pension, but reduced to

take into account the lost years of service.

'Our main thrust would be to make employers aware of just how expensive it is to let people retire early,' said UKSC adviser Bob Gibbs.

The moves come just months after the DoE signalled its intention to crack-down on ill-health retirements. From a sample of councils, it found the number of medical retirements in 1995 was three times the level predicted in 1992.

Councils are also bracing themselves for a commission report early next year which is likely to criticise existing retirement policies on grounds of cost.

In addition, councils are being driven to take action by evidence from the 1995 valuation of pension funds that they are unable to meet current liabilities. Many believe this is partly the result of an increase in early retirements.

Final recommendations will be published next year after consultation with councils.

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