Ill health and taking your pension before the age of 55

It is possible to take your pension before the age of 55 due to a medical condition that prevents you from working.

If you are eligible, you will be able to retire early and start claiming your pension early.

It's important to check the specific rules and requirements of your pension scheme, as they can vary. 

Consulting with your pension provider or a financial advisor would be beneficial to get accurate and personalised information based on your circumstances.

What is the criteria for ill health and taking your pension early?

To take your pension early due to ill health, there are generally some criteria that need to be met. 

While the specific details can vary based on the pension scheme, here are common criteria often considered:

1. You typically need to provide medical evidence that demonstrates you have a physical or mental health condition that hinders your ability to work.
2. The condition is often required to be permanent, meaning it is unlikely to improve to a level where you can return to work.
3. The medical condition should significantly impact your ability to carry out your current job or, in the case of self-employment, to earn a sufficient income.
4. Some schemes may require you to show that there is no suitable alternative employment available that you could reasonably take up given your health condition.

 

Retiring with a terminal illness

There is also a provision to help those with terminal illness. 

You could access your whole pension pot tax free if your life expectancy is less than a year, you’re under the age of 75 and your pension savings is less than £1,073,100.

Could I receive an enhanced annuity?

Yes, and an enhanced annuity can give you up to 75% more income than a conventional annuity. However, it's essential to shop around and compare quotes from different providers.

The exact amount of increase can vary based on individual circumstances, and the enhancement is determined through a medical underwriting process.

Just like conventional annuities, it's important to note that enhanced annuities are typically irreversible, meaning that once purchased, the terms cannot be changed. 

What if I can’t afford ill-health retirement?

Taking stock of your personal and company pensions, along with other savings and investments, provides a comprehensive view of your financial situation. 

Consulting a financial advisor can offer valuable insights and guidance tailored to your specific needs and goals. 

You may consider working part-time to supplement your income. 

Equity release plans are available to people who are aged 55 or over. You could be able to claim some other state benefits as a result of a health condition or disability, including:

• Universal Credit
• Council tax reduction 
• Employment and Support Allowance

 

Get expert advice

Considering all of this, it is necessary to speak to your provider. If your funds are in ecess of £30,000 it is also necessary to speak with a financial advice before making any decisions. Let Regulated Advice match you with a financial advisor for expert advice.