I’m a 53-year-old ex-police officer who has recently been awarded a local government scheme ill health Tier 3 pension because I am hearing impaired.
This allows me to possibly work in other employment, but I’m concerned about the term ‘gainful employment’, which suggests if I worked 30 hours a week for 12 months a year, my pension would be stopped.
If I could work part-time hours, how long would the working hours be before it would seriously affect my pension? I’m currently receiving an annual pension of £12,105 and have taken a lower lump sum to pay off the mortgage. Also,I’m worried about the impact tax would have on the pension and my earnings.
Your Tier 3 health pension is reviewable, and you are expected to notify your employing authority if you enter into any further employment. Your former employer would then need to decide if this is ‘gainful employment’.
The term ‘gainful employment’ is defined in the local government pension scheme’s regulations as ‘paid employment for not less than 30 hours in each week for a period of not less than 12 months’.
It’s also worth bearing in mind that the ‘test’ relates to your ability to undertake gainful employment, rather than whether you have obtained gainful employment. What your authority will be considering is whether you could work more or less than 30 hours each week over a period of at least 12 months.
Even if you do not enter further employment, your former employer should carry out a review once your Tier 3 payments have been made for 18 months.
With regard to the point you make about tax, pension income is taxable and therefore would be added to any earnings you have and taxed accordingly.
Moneywise says: Anyone with a question about a pension scheme can contact The Pensions Advisory Service for free help. Tel: 0300 123 1047 or you can send in your question via its website: Pensionsadvisoryservice.org.uk.
If you feel you need more detailed advice, then you’ll need to employ an independent financial adviser. You can search for one in your local area at Moneywise.co.uk/find-an-ifa.