Can I access my pension early due to ill health?

Written by Josie Thomas, Senior Annuity Specialist

Learn when you can access your pension fund early due to ill health, what conditions qualify, and how tax and benefits may be affected.

If you are part of a pension scheme, you can usually only access your pension savings once you reach the normal minimum pension age (NMPA). This is currently 55, but it is going up to 57 from April 2028. 

However, if you are seriously ill or unable to work because of a medical condition, you might be able to access your pension early. This is sometimes known as a medical retirement or ill health retirement.

As an Annuity Specialist here at Retirement Line, I’ve helped many people navigate their retirement income options. Sometimes the need to access pension savings early on health grounds is one of the issues we look at. 

There are a few aspects of this to consider, and hopefully this article will help those living with poor health better understand their pension options. 

What type of pension scheme do you belong to?

Before we get started, it’s important to note that when and whether you can access your pension early depends on the type of pension scheme you have. 

Early medical retirement can be arranged with either a defined contribution (DC) or defined benefit (DB) scheme:

• A defined contribution pension is a scheme that you contribute to. If it’s a workplace scheme, your employer will typically match or top up your contributions. Your final pension savings value depends on the amount contributed and investment performance. When you are ready, you turn your pension savings into income with an annuity, drawdown or other options.

• A defined benefit pension is a type of workplace pension that provides a guaranteed income in retirement, based on your final or average salary, and your length of service with the employer. Unlike a DC scheme, you don’t need to choose a separate income product: your income will come directly from the DB scheme.

As DC schemes are the most common type available to pension savers today, this guide will focus primarily on how early access works for these schemes. However, we will also cover DB pensions, as the rules for accessing these schemes early can differ.

When can I access my pension early due to ill health?

Providing you are eligible to do so – and the criteria is typically quite strict – you can access your pension fund from any age in the event of ill health. 

To take your early pension due to ill health, you’ll need to show that your illness, injury or disability stops you from doing either your current job, OR any job. Which of these applies will depend on your pension scheme’s rules and criteria.

Since every pension scheme has its own rules, it’s really important to check with your provider to see what their specific criteria are. 

What medical conditions qualify for ill health retirement?

There is no fixed list of conditions that automatically qualify you for early retirement. Medical reasons of many kinds will be considered if they severely impact your ability to work. Your pension provider will assess your case based on the medical evidence you provide, so it’s important to get a clear diagnosis and supporting documentation from your doctor. 

So when we get asked “can I get my pension early if I have cancer”, for example, the honest answer is that you might, but it depends on your pension scheme’s criteria, the severity of your condition and the evidence you provide.

What are your income options when accessing your pension early?

If you have built up a pension fund during your career, you may be able to access your pension early due to ill health. 

If you do qualify, you should have the same options for taking your money as you would if you had reached the normal pension age.

Importantly, any pension benefits you take due to ill health will be taxed the same way as if you had accessed them at the normal retirement age.

This means you can usually take up to 25% of your pension pot as a tax-free lump sum, provided it’s within your available lump sum allowance.

The rest of your pension can be used to provide an income, which will be taxed at your marginal income tax rate. 

At this point you could:

• Move your fund into income drawdown.

• Purchase either a lifetime annuity or fixed-term annuity.

• Leave your money in your pension fund, taking lump sums as and when you wish – known as an uncrystallised funds pension lump sum (UFPLS).

• Take your remaining fund as cash if your scheme allows it. If you are terminally ill with a life expectancy of less than one year, you may be able to withdraw your entire DC pension pot as a tax-free lump sum. You can read more about this further on.

If you use your pension pot to buy an annuity, you may qualify for an enhanced or impaired life annuity, which could provide a higher income based on your reduced life expectancy. 

If you were to arrange your annuity on a joint basis then your chosen beneficiary will receive your annuity income after you pass away. There are other ways to see that your partner or other loved one will receive an income from your annuity after you pass. You can read more about annuity death benefits here.

How do I access my pension early?

To apply for early health retirement, you would contact your pension scheme initially. They will explain their rules and criteria and discuss next steps. 

They will require medical evidence confirming that your condition prevents you from working. This evidence must typically come from a qualified medical practitioner who is registered with the General Medical Council (GMC) and holds an active licence to practise. Further evidence may be required, depending on how your pension scheme chooses to assess your circumstances.

If your application is approved, your pension provider will outline your options for taking a pension early due to ill health, whether as a lump sum, regular payments, or a mix of both.

Taking your pension as a lump sum due to serious ill health

If you're seriously ill and expected to live less than 12 months, you may be able to take your entire pension as a one-off lump sum instead of regular payments. This is known as a serious ill-health lump sum, and there’s no minimum age requirement to access it.

If you're under 75, this lump sum can be completely tax-free, as long as it doesn’t exceed your available lump sum and death benefit allowance (LSDBA). Anything above this allowance is taxed at your marginal income tax rate. If you’re 75 or older, the full amount is taxed as income.

As always, check with your pension provider to see if this option is available under your scheme’s criteria. Some criteria and exclusions may apply.

Defined benefit pensions and ill-health retirement

If you have a defined benefit (final salary) pension, the rules for early access of a pension due to ill health can vary depending on your scheme. Some schemes offer enhanced benefits, meaning you could receive a higher pension than if you were taking it early for other reasons.

Normally, taking a DB pension early would mean a reduced income, but many schemes waive this reduction if you’re retiring due to ill health. This helps ensure you’re not financially disadvantaged if your health prevents you from working until your normal retirement age. You could receive the pension you would have built up had you continued working and contributing until retirement.

Each pension scheme sets its own rules for approving an early pension due to ill health, and in some cases, you may need to leave employment permanently to qualify. It’s always best to check with your scheme administrator to understand exactly what you’re entitled to.

Things to think about before accessing your pension early

There are some points to consider if you are exploring the option of accessing your pension fund early:

• If you have an income protection insurance plan, accessing a pension early may reduce your payments from this plan. Your pension provider may be able to check this for you. 

• If you are still employed and pass away before taking your pension, your scheme may pay out a lump sum called a death-in-service benefit to your beneficiaries. Accessing your pension fund early could see your beneficiaries missing out on this valuable benefit.

• Accessing a lump sum of money from your pension fund could impact your eligibility for any current or future means-tested state benefits.

• You may want to speak to a financial adviser to explore how accessing your pension fund early could affect your tax position. We explore this further below in ‘Tax implications of taking your pension early’.

• Since your pension fund will no longer be invested, you should consider the potential loss of future growth, especially if you live longer than expected.

What happens if I get better and return to work?

Most schemes require medical evidence that you’re unable to work before granting early access, but they also recognise that some health conditions can improve over time. If you do recover, any payments you’ve already received will remain valid, as long as you met the eligibility criteria when they were first granted.

However, some pension schemes may have rules that stop payments if your health improves. It’s always worth checking your scheme’s terms or speaking to them to understand how your benefits might be affected if you’re able to return to work.

Can I access my pension early for other reasons?

If you wish to access your fund before age 55, you might be wondering “is it possible to get your pension early for other reasons?”. 

In most cases, you can’t take money from your pension before you turn 55, unless you qualify for early access due to ill health, as we’ve covered in this guide.

There are a few exceptions, though. Some professions, like professional athletes, have earlier retirement ages due to the physical demands of their careers.

Also, if you joined a pension scheme before 6 April 2006, you might have a protected pension age that allows you to access your pension earlier than 55. If you think this could apply to you, check with your pension scheme.

Tax implications of taking your pension early

If your application is approved, you may be able to access a pension early in the UK without the usual tax penalties associated with early withdrawals. However, the tax treatment of your pension will depend on whether you take it as a lump sum or as regular payments.

As touched upon before, if you are terminally ill with a life expectancy of less than 12 months, you may be able to withdraw your entire pension tax-free. This is provided you are under 75, your pension does not exceed your lump sum and death benefit allowance, and you have not already accessed it. 

If you are over 75, any lump sum withdrawal will be taxed as income at your marginal rate.

Will my estate be liable for inheritance tax (IHT)?

If the total value of your estate might exceed current IHT thresholds, you should consider the possible effect of taking your pension early.

At present (April 2025), pension funds and income are not counted as part of your estate for IHT. However, from 6 April 2027, pension savings and income will be included in IHT calculations - although the precise details of this have yet to be announced.

If IHT is an issue for you, please speak to a financial adviser. They can help you weigh up both short-term needs and the long-term impact on your estate and loved ones. 

Can I access my State Pension early if I’m ill?

The State Pension cannot be accessed early under any circumstances, even if you are seriously ill or unable to work. The earliest you can claim it is when you reach State Pension age, which is currently 66 and set to rise in the future.

If you are unable to work due to ill health before reaching State Pension age, you may be eligible for other forms of financial support, such as:

• Statutory Sick Pay (if you are employed but unable to work).

• Employment and Support Allowance (ESA) for those unable to work due to illness or disability.

• Universal Credit, which may provide additional financial support depending on your circumstances.

Key takeaways

• If you want to access a pension early, ill health may enable you to do this before you reach 55 (or 57 from 2028) if it means you are unable to work or have less than 12 months to live.

• Pension providers have different rules, so check with yours to see what applies.

• You will need medical evidence from a qualified practitioner to support your claim.

• Tax treatment varies depending on how you take your pension, but terminally ill individuals may be able to access a pension tax-free. You may also want to consider inheritance tax implications if your estate is likely to be over the IHT threshold.

• Due to your ill health, you may qualify for an enhanced annuity. This gains you access to more competitive annuity rates and a higher guaranteed income for life.

• Defined benefit pensions may offer enhanced benefits for ill-health retirement.

• The State Pension cannot be accessed early, but other benefits may be available if you are unable to work.

Further help and information

If you’re considering early retirement for medical reasons, you may wish to speak to your pension provider or a financial adviser to understand your options, tax implications and any potential impact on your long-term retirement income. 

Here at Retirement Line we can also help you understand your options for guaranteed income from an annuity. You can speak to our team today by calling freephone 0800 652 1316 or request a call back. 

Alternatively, use our free online tools for an instant estimate of how much annuity income you might expect to achieve.

Sources

Medical medical evidence confirming that your condition prevents you from working: Understanding early access to pensions when in ill-health. FT Adviser. Accessed 13 March 2025.

Ill health retirement should have the same options as when reaching the normal pension age: Ill-health retirement: early medical retirement. Money Helper. Accessed 13 March 2025.

If terminally ill you may be able to withdraw your entire pension pot as a tax-free lump sum: Early retirement, your pension and benefits. Gov.uk. Accessed 13 March 2025.

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