Terminal Illness

Rotan

I am 10 months short of 55 and have just had cancer diagnosed. Prognosis is I'll survive another 2/3 years. Had to stop work and wife wants to go part time. Pension pot worth around 400k. Am aware when you have less than 12 months you can get pension tax free. My problem is that I need some sort of bridging loan for about a year before I can take pension to cover loss of income etc. My thought at moment is to add £30,000 to mortgage (then pay off when i get pension).
Views welcome, obviously my main aim is to look after the family,

timthebin

Rotan,

Didn't want to read and run - thoughts are with you and your family.

People will be along with more knowledge than I but as long as there's equity in your home there's no reason why you can't do additional borrowing on your mortgage and then repay when you get your TFLS.

Although I believe that some pensions have a clause whereby you can access before 55 when diagnosed with a terminal illness - I would check the T&C's with your pension provider.

Also, probably wont matter a great deal but check with your mortgage provider on early repayment penalties - a number will charge up to 5% on any overpayment in excess of 10% of the amount borrowed.

All the best.

Tcquins

Hi Rotan,

Whilst there is the serious ill health lump sum option for your pension which means you can take it all out tax free if your life expectancy is less than 12 months, the second option which may be available to you and far more suitable, is that you may be able to access your pension due to 'ill health', as you are unable to work. Then you can draw the relevant tax free cash and income required, just like you could after the age of 55.

The provider will have various requirements which you will need to check. Generally a doctor's/gp letter.

Also bear in mind that the more modern defined contribution pensions, are outside the estate for inheritance tax purposes. Additionally, some of them allow your beneficiaries to be able to take money from the pension you leave behind tax free as and when they need it- called beneficiary flexi-access drawdown. May also be worth checking with the provider about the death benefit options available to your wife.

Appreciate its a difficult thing to research, but you can leave things in a good state for your family with the right planning.

xylophone

A DC pension? See

https://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/ill-health

If you have a defined contribution (DC) scheme and you need to give up work due to ill health, it may be possible to take your benefits, irrespective of your age. You may be able to take your benefits in a number of ways such as; a pension or possibly a tax-free cash sum and reduced pension. You should check the terms and conditions of your pension arrangement for details about how your scheme works and the options you have available to you if you are unwell. Your scheme should outline under what circumstances you may be able to access your pension early in the event of ill health. They will normally refer to this as “qualifying conditions”.

Check with your pension provider.

jamesd

Since she's still working your wife might try credit cards with 0% for spending deals. Mortgage lender might be reluctant.

Beneficiary flexi-access drawdown beats you taking the whole pot as a tax free lump sum. This creates a drawdown pension for your named beneficiaries after your death. In cases of death before age 75 they can withdraw money from this tax free whenever they like at any age, particularly handy for young children who can't access a childrens' ISA. They can nominate successors to get it after their own death. This makes the pension a sort of super-ISA, set up for them with the usual pension tax benefits but no tax taking the money out, just like an ISA.

Because of this great tax advantage it's now probably better for you to take serious ill health lump sums only to meet your own needs and those anticipated soon after death and leave the money in the pension for everyone else. One disadvantage is if you don't actually die. You can get the serious ill health lump sum money with twelve months life expectancy and if you don't die there are no penalties, it's still yours tax free. But the pension potions are only there after your death.

Avoid moving the money to another pension scheme before your death. HMRC are seeking to have the pension death benefits invalidated out if this happens within two years. While so far they have been losing, it's a potential fight best avoided in a situation like yours where a transfer is probably not needed.

PeacefulWaters

Talk to your cancer nurse about personal independence payments if you haven't already.

mjdh1957

My late partner retired with a terminal diagnosis with a short term life expectancy but ended up living for four years after he retired. His oncologist had to certify his claim and was willing to do so. I'm sure nowadays there is less of the 'only one year to live' hard and fast prognosis so maybe your oncologist will agree to sign a claim for ill health retirement for you even though your initial prognosis is for longer.

It's a terrible position to be in though, and I wish you well

bigadaj

CBX1985 wrote: »

Really sorry to hear of your diagnosis. I understand how difficult dealing with these issues are at times like these, but it will reduce your stress in the future.

I am an IFA and I will say in this instance you really need to take professional advice; differing pensions have differing policies and the best solutions usually require knowing what to ask. I have found some pension companies have been incredibly generous and willing to bend their own rules a little to help out. Not always the case, though.

Without seeing your pension policy I, nor anyone else here, can provide accurate advice on what would be best for you. Just because something might usually be the best solution, it might not be in your case.

Mortgage increase might be possible dependent on your current LTV, your wife's pension/income/age etc. Check with your provider. Avoid bridging loans, though. They're hideously expensive.

Good luck with your fight!

Would, be worth adding your status in your footer, birth to cover yourself in terms of advice and avoiding criticism.

It's also considered bad form to tout for business as you seem to have done on your other post.