Sorting out other financial issues

Cancer can have many financial effects. At one time, there may be several different issues on your mind:

  • paying mortgage, rent or debts
  • ensuring your family could cope if your illness got worse
  • writing a will
  • taking early retirement
  • getting financial advice
  • your tax position
  • making a complaint about financial services.

Our financial guides on 0808 808 00 00 can offer advice on all of these issues.

Cancer or its treatment can make managing your savings and investments difficult. You may wish to formally involve someone close to you. Consider setting up a third-party mandate or joint account.

Professional financial advisers can also give specific recommendations about products or services that are right for you. If you’re unhappy with a service you’ve already received, complain to the company directly or take your case to the free ombudsman service.

Making a will

If you don’t have a will, it’s a good idea to write one. If you already have a will, it’s important to keep it up to date. This will make sure your money is distributed as you would have wanted if you die.

Our free booklet Your step-by-step guide to making a will could help. Call 0808 808 00 00 to order a free copy.

Taking early retirement

Living with cancer may mean time off work both for you and anyone who is caring for you. This could disrupt your retirement savings and may mean you need to take a pension early.

Normally the earliest you can start to draw out your pension savings is age 55. But you can start a pension earlier than this if you have to stop work permanently because of ill health.

Defined contribution pension schemes

With this type of pension scheme, you and usually your employer (if you have one) pay in contributions which are invested and hopefully grow.

Under new rules from April 2015, you can now draw your defined contribution pension savings out in any way you like from age 55 onwards. You can take up to all of your savings as one lump sum or a series of lump sums. The first 25% will be tax-free and amounts above this will be taxed at your normal tax rate(s).

You can also use part or all of the savings to give you a monthly income by buying an annuity or using a drawdown arrangement. An annuity is a type of insurance that pays you an income for the rest of your life and can carry on paying an income or lump sum to your survivors. Drawdown is an arrangement where your savings stay invested. You draw out an income and leave any unused savings to your survivors. At the outset, you can take up to 25% of savings used in these ways as a tax-free lump sum. The income, and any other lump sums you draw out later, are then taxed at your normal rates.

You may choose to do a combination of these options. You will have the right to free general guidance on your options from the government’s Pension Wise service. For more detailed help and recommendations (for which you will have to pay), talk to a financial adviser.

Defined benefit schemes

With defined benefit schemes, your employer promises to give you a pension when you retire, usually based on your earnings and how long you have been a member of the pension scheme.

You may be able to take your benefits early, from age 55, but it will depend on the rules of your scheme. You may find that your scheme reduces your benefits if you take them early because the pension is likely to be paid to you for longer.

You can usually also take a cash lump sum when you start your pension, but this may reduce the pension income you receive.

To find out if you can retire early, you should ask your pension provider. You should also ask for details of how early retirement will affect your pension income.

With some schemes, you have the right to transfer your defined benefit pension to a defined contribution scheme. You should check this with your pension provider. Transferring would give you greater flexibility to draw out your savings as cash.

Defined benefit schemes are a secure pension and often also include pensions and life insurance for your survivors. You would be giving all of this up if you transferred.

If the value of your defined benefits is £30,000 or more, you will be required to take financial advice before you can make a transfer.

Retirement due to ill health

If you are not yet 55, you could ask your employer or pension provider if you can retire on the grounds of ill health. This would allow you to take up to 25% of your pension fund as a tax-free lump sum and the rest as pension taxed at your normal rates. This is true for both defined contribution and defined benefit schemes.

If you have under 12 months to live, you can retire on the grounds of serious ill health. With this option, you can usually take your whole pension fund as a tax-free lump sum.

There are other issues you should consider if you’re thinking about these options. Call our financial guides on 0808 808 00 00 for more information.

You might want an estimate of the pension you may get. You can check your annual pension statement from your pension provider. You can also use the calculator on the Money Advice Service website.

Remember that your actual pension may vary from these estimates, depending on:

  • how old you are when you access your pension
  • the financial choices you make then
  • whether you draw out any lump sums before then
  • your health at the time.

Our financial guides can explain more about this.

If you’ve lost the details of an old pension scheme, the Pension Tracing Service may be able to help you find the contact details.

What is the State Pension?

The State Pension is a regular payment you can get from the government when you reach a certain age. How much State Pension you get depends on how many National Insurance contributions you have made. National Insurance is a tax you pay while you’re working. These contributions may help you become eligible for State Pension and some other state benefits.

If you get a war pension or financial support from the Armed Forces Compensation Scheme, what you’re entitled to may be different from what is explained here. Ask one of our welfare rights advisers what this means for you – call them for free on 0808 808 00 00.

Buying financial products and services

Saving for the future often involves buying financial products and services. Choosing suitable ones means matching the products and services to your personal circumstances – in particular:

  • the amount of risk you can cope with
  • what you can afford
  • your tax and benefit position
  • how long you would like to invest for
  • your health and the health of your family
  • your views (for example, ethical or religious beliefs).

It’s essential that you understand what you’re buying, and that you read the whole product document, including any small print. The main features of many products are explained in a booklet or section called key facts.

You may feel confident working through all these steps yourself. If not, you can get help with some or all of them by contacting a financial adviser.

Key Facts

For many products, the Financial Conduct Authority says the provider has to give you information about risk, charges and other important matters in a standard way. This helps you understand the product and compare it with similar products from other providers. You can easily spot this information because it’s labelled with this Key Facts logo.

Key Facts logo - black speech bubble that reads 'key facts' in white.
Key Facts logo - black speech bubble that reads 'key facts' in white.

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Making a complaint about financial services

If you have a complaint about a financial product or service, first complain to the company that sold it to you. If you’re not happy with the company’s response, say that you want to use its formal complaints procedure.

Appealing a decision

The company should give you its final response within eight weeks. If you’re unhappy with the company’s decision or it has not got back to you within that time, you can take your case to the free, independent Financial Ombudsman Service. The Ombudsman can order the company to put matters right, which could include paying you compensation.

You can take your case to court if you’re unhappy with the Ombudsman’s decision. But this could be an expensive and long process.

If the company goes out of business

If a financial company goes out of business owing you money, you may be able to get compensation from the Financial Services Compensation Scheme.

Asking someone to manage your finances for you

If cancer or its treatment is making it difficult for you to look after your savings and investments, or if you think this might happen in the future, you may want to arrange for someone close to you to be involved in managing them. This would need to be someone you trust, and you would need to make it a formal arrangement.

You should not give anyone else your personal identification numbers (pins) or passwords. This would break your provider’s rules. They can then refuse to refund any money that goes missing from your account.

Joint access

If you want someone to be able to access your savings and investments, make the arrangement more formal. For example, you could set up a third-party mandate or joint account. When you set these up, the person helping you can have their own card and pin.

Many savings accounts and some other savings and investments (but not ISAs) can be held jointly with someone else, such as a partner. Transferring savings or investments into joint names means the other person becomes joint owner, can make withdrawals and other decisions, and automatically inherits the whole investment if you die.

There are ways that other people can be given legal power to manage your affairs for you. Our financial guides can give you more information – call them on 0808 808 00 00.

Next steps

  • Ensure you have an up-to-date will.
  • If you are aged 55 or over, contact your pension provider to check if you are able to take early retirement or draw out from your pension fund.
  • If you are not yet 55, contact your pension provider to check if you can retire on the grounds of ill health.
  • Contact the Financial Ombudsman Service if you have a complaint about a financial product or service.
  • Call the Macmillan financial guides on 0808 808 00 00 for free guidance on arranging for someone to look after your finances and any other financial matters.

Back to Planning your finances

Assessing your finances

Cancer can lead to extra expenses. By assessing your situation, you can plan ahead to meet your needs.

Maximise your income

Reviewing your savings, investments and income will help you plan your budget.

Covering your costs

If you are struggling to cover your essential costs, call us on 0808 808 00 00. You may be eligible for financial help.

Inheritance tax

Inheritance tax is paid if your estate is worth more than £325,000 after your death. This includes property, money and possessions.