Do I Qualify for an Ill-Health Pension?

I’m not in very good health and will struggle to continue working. A friend mentioned there are ill-health pensions, how do I qualify for this?

Question asked by Chris Stevenson
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Answered by Neil Adams

Some pension schemes offer an ill-health pension. This means if you are unable to work because of poor health, you can take your pension benefits early, in some cases before you reach the age of 55. This is commonly known as being ‘pensioned off’.

If you are in ill-health, check with your pension scheme administrators to see if you qualify. Each scheme will typically have its own definitions of what ill-health means and when you will and won’t be considered for an ill-health pension.

A serious ill-health pension may be payable if you have a reduced life expectancy – usually less than one year. This means you may be able to take your entire pension pot as a lump sum and special tax treatment will apply so that you aren’t hit with a hefty tax bill.

If you’re in a defined contribution pension scheme, one of the options open to you is to buy an enhanced annuity with your pension pot. This will give you an income over and above a standard annuity to take into account your projected shorter life expectancy.

If you are in ill-health a professional financial adviser may assist in providing you with the various options available to you.

ill-health pension
 
'pensioned off'
 
retirement planning
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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