My Macmillan

Ill Health Retirement

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 a one-off lump sum representing the value of your pension benefits (although your scheme may keep some back to pay benefits to any dependants you have).

If you’re 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.

Instead of a lump sum, you may get a regular pension income. This may be higher than you would normally get as you will probably be claiming it for a shorter period of time.

If you die while still in employment, your pension scheme may pay out a lump sum called death‑in‑service. But this is not paid after you have retired.

It’s important to speak to a financial adviser to make sure you choose the best option for your situation and for your dependants.

Elsewhere on macmillan.org.uk