HM Treasury News Release
5 August 1999
MILBURN ANNOUNCES REVIEW OF ILL HEALTH RETIREMENTS
Annual cost of new medical retirements now
estimated at £1 billion
The Chief Secretary to the Treasury, Alan Milburn MP, announced today
a wide ranging review into the level of ill health retirement in the
About 25,000 staff working in the public sector
retire on ill health grounds each year with an average extra cost
to pension funds in excess of £35,000. It is estimated that the
annual cost of each year's new ill health retirements is now over
Ill health retirements hit a peak in the mid-1990s and are
much greater than in previous decade.
For example the rate of ill-health retirements among NHS male administrators
in their 30s and 40s rose fourfold between 1969 and 1994, before dropping
off in the late 1990s.
Ministers are particularly concerned about the wide variations in
the incidence of ill health retirement between different parts of
the public sector and between different employers within the public
The Review, among other issues, will look at the causes of ill-health
retirements, including stress, and how to manage these better.
Speaking today Alan Milburn said:
"We need to find out why these levels vary so much and ensure ill
health retirements are used appropriately.
"The review will look in particular at how better pension scheme
and staff management can help avoid the need for ill health retirement
in the first place.
"It will help employees by ensuring that employers adopt best practice
to maintain their well being and their earning capacity.
"And it will help employers by helping ensure that the services of
experienced staff are retained to provide the best standards of service
to the public."
"People working in the public sector have a right to retire on ill
health grounds when there are good reasons for it."
"In those circumstances it is vital that retiring staff get the pension
benefits to which they are entitled.
"But the levels of medical retirement numbers and the high costs
to the taxpayer mean that a review is now necessary."
Notes to Editors
1. The Terms of Reference for the review are:
"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;
To make recommendations to Ministers on the implementation of measures
to spread best practice and to ensure the appropriate use of ill health
2. The work of the review will be overseen by an Inter-Departmental
Group of officials chaired by the Treasury, and supported by Treasury
and Cabinet Office officials.
3. The Group will also include representatives from a range of Departments,
and from TUC and CBI. The Association of Local Authority Medical Advisers,
the Institute of Personel Development, and the National Association
of Pension Funds have also been invited to provide representatives.
4. Officials have been asked to report to the Chief Secretary with
conclusions and recommendations by early 2000.