Taking your pension early due to serious ill health
We understand this may be a difficult time for you. If you’re dealing with ill health or a
terminal illness, we’re here to guide you through your options and make things as straightforward as possible.
Most people can’t take their pension until they’re 55 (57 from April 2028). However, if you’re unable to work because of long-term ill health or a terminal illness, you might be able to take money out of your pension earlier. This is often called an ‘ill-health pension’, ‘early medical retirement’, or ‘retirement on medical grounds’.
Who can access their pension early?
If you’re ill and can’t work
You may be able to take your pension early if:
- you’re unable to do your job because of physical or mental ill health
- you’re unlikely to work again before your State Pension age or selected retirement age
- you’ve stopped working in the job linked to your pension with us.
If you have a terminal illness
If you’re under 75 and expected to live less than 12 months, you may be able to take your whole pension as a tax-free lump sum.
Please see how to access your pension when terminally ill for more details.
If you’re aged 55 or over
You can access your pension in the usual way without making an ill-health request.
However, if you have a terminal illness, you should make an ill‑health request instead. This may allow you to receive a higher tax‑free amount.
How to access your pension early due to ill health
When you contact us to request early access to your pension, we’ll send you a letter explaining your options and a medical form for your doctor to complete.
Your doctor will need to confirm your current health and ability to work. We’ll then review your request based on the medical evidence you provide which should show you’re unable to do your job because of mental or physical ill health. We may ask for additional medical evidence to support your application. If it’s still unclear whether you’re eligible, your case may be reviewed by our Governance Panel or Trustee.
If you’ve been employed within the last year, your employer must also complete an employer declaration.
If your application is approved, we’ll confirm the options you have for taking your pension money. Typically, 25% of your payment is tax-free, with 75% taxed at your marginal income tax rate. But if your application isn’t approved, we’ll explain what happens next , and how long you have to appeal the decision.
How to access your pension when terminally ill
If you’re diagnosed with a terminal illness and have a life expectancy of less than 12 months, you may be able to take your whole pension as a lump sum.
- If you’re under 75, this lump sum payment is tax free, as long as the total value across all your pensions isn’t more than £1,073,100.
- If you’re over 75, the lump sum would be subject to income tax, at the highest rate you pay.
Find out more about income and inheritance tax on our page about what happens to your pension when you die.
Ways to receive your ill-health pension
If your request is approved, you can usually choose how you’d like to receive your pension:
Transfer out
If you’re looking for a way to take your pension money that we don’t offer, you could transfer your money to another provider who does.
Impact on your pension value
Taking your pension early usually means you’ll have a lower income than if you’d waited until age 55 (57 from April 2028) to access your money. This could mean your pension savings don’t last as long as you might expect. This is because you’ve had less time to contribute, and your pension has had less time to potentially grow. You might also receive an unexpected tax bill or loose certain benefits you might be receiving by taking your money all at once.
Before deciding to take your pension early, it’s worth considering:
- how much money you’ll need for retirement
- other sources of income you could dip into instead, such as savings or investments.
Our retirement planner can help you work out how much money you’ll need for retirement. But if you’re unsure about how long your savings will last or the tax implications of taking your pension early, it might be worth getting some independent financial advice. You can find a regulated financial adviser on MoneyHelper or Unbiased.
Beware of scams
Sadly scammers often target people taking money early and you could lose your life savings. Learn how to protect yourself from pension scams.
Further help
You can find more advice and guidance about ill-health retirement from:
