Getting your pension early

You may be able to get your personal or workplace pension early if you have or have had cancer. But this depends on the rules of your pension scheme or employer.

Your personal or workplace pensions

If you have or have had cancer, you may be able to retire from work due to your health and get your pension early. But this depends on your pension scheme. Getting your pension early can affect how much money you get. This information is about accessing personal or workplace pensions.

You will not be able to claim your State Pension until you reach State Pension age. For information on how early retirement affects your State Pension, visit:

Related pages

If you have a defined contribution scheme

Defined contribution schemes are where you gradually build up money over time. If your employer has arranged the pension, they will add payments as well as you.

  • Lump sums

    You can choose to take all your pension savings in one go. This is called a lump sum. When you do this, you usually keep 25% of the money tax-free. You pay tax on the rest. But sometimes there is no tax to pay if someone is accessing it due to ill health.

    You can also take money out as smaller lump sums. With this option, each time you take a smaller lump sum, 25% of the money is tax-free. The rest is classed as income that you may pay tax on. 

    The lump sums that you pay tax on get added to your income for the year. Your income might include a job or other investments. Lump sum payments might push you into a higher income tax band. Usually, you can take out lump sums as often as you like. But there may be charges each time you do it, or limits on how often you can do this. Taking lump sums from your pension also means you will have less money when you retire. 

    Income includes some state benefits. Taking lump sums may affect you getting means-tested benefits now or in the future, so you may want to check before deciding what to do. 

    When you take lump sums, it can affect how much you can pay into your pension in the future. It affects your annual allowance. This is the amount you can pay into your pension each tax year and still get tax relief. In most cases, if you take lump sums, the amount you can pay into your pensions will be reduced to £10,000. This is called Money Purchase Annual Allowance (MPPA).

  • Pension drawdown

    You can choose a pension scheme that gives you the option of a regular income. You can take 25% of your pension tax-free and then leave the rest invested in drawdown. You can then take money out when you need to. Any lump sums or income you take from drawdown will be taxed. The money you take out gets added to your income for the year. 

    When you move your savings into a flexi-access drawdown fund, you can take up to 25% of your pension savings as a tax-free cash lump sum. Any lump sums or income you take after that will be taxed.

    Your income might include a job or other investments. This might push you into a higher income tax band. You can change the amount it pays you over time. This option is called flexi-access drawdown. 

    Not all pension schemes offer flexi-access drawdown. It might be possible to change to a provider that does offer this option, but you may have to pay a fee. You should also check that you will not lose any other features of your current plan.

    Flexi-access drawdown is not guaranteed, as you may run out of money. This can happen if:

    • you take out too muchtoo soon
    • you live longer than you have planned for
    • the investments in your pension do not perform as well as you thought.

    Income includes some state benefits. Taking money from flexi-access drawdown may affect you getting means-tested benefits now or in the future. You may want to check before deciding what to do.

    Flexi-access drawdown can affect how much you can save into your pension in the future. It affects your annual allowance. This is the amount you can pay into your pension each tax year and still get tax relief. If you choose to take money out of your flexi-access drawdown, the amount you can pay into your pension will be reduced to £10,000. This is called Money Purchase Annual Allowance (MPAA).

  • Annuity

    An annuity gives you a regular, guaranteed income for after you retire. They are sold by insurance companies. You can buy an annuity with some, or all, of your pension. It can give you an income for the rest of your life or for an agreed number of years.

    When you buy an annuity, you can take 25% of your pension as a tax-free lump sum. Then you pay tax on the income you get from the annuity. The money you get depends on how much is in your pension and what you want the income to be over time. 

    If you have or have had cancer, you may be able to get an enhanced annuity. These are for people with health conditions or lifestyle factors that could reduce their life expectancy. An enhanced annuity generally pays out more than other types of annuities. 

    Unlike flexi-access drawdown, you cannot run out of money with a lifetime annuity. The income is guaranteed for the rest of your life. But you need to decide if it is right for you. It might depend on the rate of income you are offered. You may need to think about how long you think you will live, or if you can choose what will happen with it after you die. 

    Your current pension provider may offer you their own annuity policy, but you need to consider if it is right for you. You can buy annuities from other providers. This is called the open market option. 

    Visit MoneyHelper for information on how to find the best annuity product. MoneyHelper has an online tool that might help when looking for annuities.

Things to think about

When you are thinking about getting your personal or workplace pension early, it may help to consider:

  • the amount in your pension
  • how much income you and your loved ones need
  • if you want to leave any savings to your beneficiaries – people who get your money or possessions when you die.
  • how you feel about investment risk
  • your income from other sources
  • your health and how long you expect to live
  • whether you get any income-related state benefits, as these can be affected.

You do not have to choose 1 option. It is possible to buy an annuity and leave the rest in a pension drawdown fund. This can give you both an income and pension savings when needed later.

A financial guide will help you consider your options. You can speak to a Macmillan financial guide for free by calling 0808 808 0000.

If you have a defined benefit scheme

A defined benefit pension scheme is usually arranged by your employer to give you a pension when you retire. There are 2 types:

  • final salary – based on what you were earning when you left or retired
  • career average – based on an average of your salary throughout your time with that employer.

With a defined benefit scheme, you can access your pension when you retire. The normal retirement age is usually between the ages of 60 and State Pension age unless you have ill health. You can also access these schemes from the age of 55, but the income will be reduced because the scheme is paying it for longer. You can get a lump sum and a regular income for the rest of your life.

How much you get depends on:

  • your salary
  • how long you have worked for your employer
  • the rules of your pension scheme.

You may be able to transfer it to a defined contribution scheme. This might give you more flexibility. It is best to get financial advice to find out if transferring is a good option for you. You can also find out more about transferring your pensions at gov.uk

Taking your pension early

You may get less money if you claim your defined benefit scheme pension early. This is because the scheme will be paying your pension for longer. If this is due to ill health, the scheme may not reduce the amount.

If you qualify for ill-health early retirement, your pension scheme will tell you what your options are. You may wish to speak to a regulated financial adviser before you decide.

If you have a small pension

You may be able to take your defined benefit pension as a lump sum if:

  • you are aged at least 55 (or under 55, if you have ill health)
  • the total value of all your pension funds added together is no more than £30,000.

If someone chooses this option, 25% of the lump sum is tax-free. The rest is taxed as income.

Finding lost pensions

The Pension Tracing Service is a free service that can help you find lost pensions. It can tell you the details of your provider, but not how much is in your pension. It can help if you:

  • have lost track of pensions you used to pay into 
  • do not know the details of the schemes you used to pay into.

Serious ill-health retirement

If you are expected to live less than 12 months, you may be able to take serious ill-health retirement if your provider offers this option. You can usually get all your pension tax-free in 1 lump sum. This may depend on your scheme.

But there are things you might want to think about:

  • If you are aged under 75, usually you will not have to pay tax on the lump sum. But a registered medical professional such as your cancer doctor will need to explain to your pension provider that you are expected to live for less than 12 months.
  • If you are aged 75 or over, 25% of the lump sum is tax-free and the rest is taxed as income.
  • If you have taken a lump sum can affect you getting means-tested benefits.
  • If you choose to take serious ill-health retirement might use all the money in your pension. This means your beneficiaries may not get any money after you die.
  • If you were to die before taking your pension and you are still employed, your pension may pay out a lump sum called a death-in-service benefit to your beneficiaries. 
  • If you were to die after taking your pension, any money you take from your pension but do not spend or give away before you die becomes part of your estate. Your estate is the money, possessions and property you leave behind. 

We have more information about passing on your pension benefits.

You should speak to a financial guide to make sure you choose the best option for you and for people who are financially dependent on you.

You can call the Macmillan Support Line for free on 0808 808 0000 and speak to our financial guides about pensions and inheritance tax.

About our information

  • Reviewers

    This information has been written, revised and edited by Macmillan Cancer Support’s Cancer Information Development team. It has been reviewed by expert medical and health professionals and people living with cancer. It has been approved by Louise Dinsdale, Service Knowledge Specialist – Financial Guidance Team.

    Our cancer information has been awarded the PIF TICK. Created by the Patient Information Forum, this quality mark shows we meet PIF’s 10 criteria for trustworthy health information.

The language we use

We want everyone affected by cancer to feel our information is written for them.

We want our information to be as clear as possible. To do this, we try to:

  • use plain English
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We use gender-inclusive language and talk to our readers as ‘you’ so that everyone feels included. Where clinically necessary we use the terms ‘men’ and ‘women’ or ‘male’ and ‘female’. For example, we do so when talking about parts of the body or mentioning statistics or research about who is affected.

You can read more about how we produce our information here.

Date reviewed

Reviewed: 01 September 2023
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Next review: 01 September 2026
Trusted Information Creator - Patient Information Forum
Trusted Information Creator - Patient Information Forum

Our cancer information meets the PIF TICK quality mark.

This means it is easy to use, up-to-date and based on the latest evidence. Learn more about how we produce our information.