HISTORIC PRESS RELEASE : Action needs to be taken to Reduce Ill Health Retirement [July 2000]

The press release issued by HM Treasury on 11 July 2000.

A Treasury-led review published today 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 retirement

  The report shows ill health retirement:

• costs the taxpayer £1 billion 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 £1 billion 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.”