Ill health Pensions
In the event of ill health, it is possible to take your pension early from most types of pensions, even before the age of 55.
Remember, to take your pension early on medical grounds, the illness:-
Does not have to be life threatening
Must be permanent
Must prevent you from working
There are different procedures and criteria which apply, depending on the type of scheme you belong to. Occupational pensions do tend to be more difficult to take early, than personal pensions.
Definitions
When it comes to pensions there are two “types” of ill health.
Serious ill health – usually means that you are not expected to live longer than 12 months. If you are in “serious ill health”, it is sometimes possible to receive all of your pension as an immediate lump sum. This is usually the case with personal pensions.
However, if you have a final salary pension the scheme rules may not allow this but, it may be possible to transfer it to a new personal pension to potentially benefit from this.
If you are too ill to work, but have a life expectancy of more than 12 months, you would normally be allowed to take a part of your pension as tax-free lump sum and the remainder as income.
Potentially, there are more options if you have a personal pension as you could qualify for a better pension income due to your illness. These are known as enhanced annuities – click to find out more.
Incapacity – this is described by the HMRC as someone being ”medically incapable (either physically or mentally) as a result of injury, sickness, disease or disability of continuing his/her current occupation and as a result of the ill health, ceases to carry on their occupation.”
So, in short, the permanent inability to do your own job. This is sometimes referred to as incapacity.
With an ill health pension it is possible to take your pension before 55, as long as it has been declared by a medical professional. To find out more about taking your pension before 55, click here.
If you are in ill health you may qualify for more income from an Enhanced Lifetime Annuity. This is an annuity that takes into account medical conditions. Discover Enhanced Lifetime Annuities and see if you may qualify.