If you have or have had cancer, you may be able to retire and claim your pension early because of ill health. Your illness usually has to be permanent and stopping you from working, but it may depend on the rules of your pension scheme.
If you qualify for ill-health early retirement, your pension scheme will tell you what your options are.
Life expectancy of less than 12 months
If you have a life expectancy of less than 12 months, you may be able to retire because of serious ill health. You will usually get the whole of your pension as a one-off lump sum.
- If you are under 75, the whole sum will usually be tax-free. In this case, a registered medical professional must give evidence to the scheme administrator that your life expectancy is less than a year.
- If you are 75 or older, 25% of the lump sum will be tax-free and the rest taxed as income.
- If you die while employed, your pension scheme may pay out a lump sum called death-in-service. The amount is often a multiple of your salary at the date of death. You should speak to a financial adviser to make sure you take the best option for you and for people who are financially dependent on you.
- Any money you take from your pension, but do not spend or give away before you die, will become part of your estate. Your estate is the money and property you leave behind. We have more information about passing on your pension benefits.