Ill Health Retirement

zopoll

Hi all, I am 51 years old and have been disabled with a chronic illness, for the last 4 years. I have 4 small pensions from when I used to work. I am aware that my life span is becoming limited by the condition that I suffer from and would like to get hold of my pension as soon as I can. In order to simplify the ill-health retirement claim process could I move my pensions into one scheme and then make the claim with that provider? I don't know much about pensions so it may seem like a dumb question but any advice would be appreciated. Thanks

Marcon

zopoll said:

Hi all, I am 51 years old and have been disabled with a chronic illness, for the last 4 years. I have 4 small pensions from when I used to work. I am aware that my life span is becoming limited by the condition that I suffer from and would like to get hold of my pension as soon as I can. In order to simplify the ill-health retirement claim process could I move my pensions into one scheme and then make the claim with that provider? I don't know much about pensions so it may seem like a dumb question but any advice would be appreciated. Thanks

The starting point is to establish if these are defined benefit (DB) or defined contribution (DC) pension schemes. See https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/the-different-pensions-you-can-get-if-you-live-and-work-in-the-uk for an explanation of what those terms mean.

You'll find the necessary information on any paperwork you have relating to each scheme. A DC scheme will show you a 'pot' value; a DB scheme will show an indication of the pension you might get at the scheme's retirement age. If you're still not sure, post the names of the schemes here and someone should be able to identify for you.

Once you know that, please could you come back and post your findings (ie all DB, all DC or a mix of the two) - otherwise you could get some very long and totally irrelevant answers!

zopoll

3 are DC and 1 is DB?

Marcon

zopoll said:

3 are DC and 1 is DB?

It's an HMRC requirement that if you wish to access your pension before age 55 (57 from 6 April 2028) on grounds of ill health* you will need to provide written medical evidence from a UK registered medical practitioner that (in broad terms - the exact definition varies from one scheme to another) you are too ill to work again between now and retirement age. A life limiting condition/being disabled doesn't necessarily mean you are unable to work at all, so much will depend on the nature of your health issues and the scheme's requirements, especially in relation to a DB scheme.

The DB scheme will have its own rules and requirements relating to ill health early retirement. It may be quite complicated and expensive to transfer that, particularly if the 'transfer value' the scheme offers you to move your money to another scheme is at least £30K, in which case you'll have to take regulated financial advice, which typically costs at least £5K. I suggest you write to the administrators of the scheme and ask what benefits you'd get if you applied for/were granted ill health early retirement, and what medical evidence will be needed to support any such application. 

If the 3 DC schemes don't have things called 'safeguarded benefits' (basically some sort of guarantee or promise, such as a 'Guaranteed Annuity Rate'), putting them all into one pot shouldn't be an issue. That said, they are all likely to have a similar process for accessing your pension early on grounds of ill health, so the amount of paperwork involved might not be as bad as you fear. Contact the pension providers for more information about applying for ill health early retirement, or look on their websites.



*if you have something called a protected pension age you may be able to take it earlier - not many people do, but I mention it for completeness, not to add to the complexity!

DRS1

Ill health early retirement is mainly about receiving your pension earlier than the normal early retirement date.  There may also be a serious ill health provision which would apply if you were at death's door and allows a lump sum payment.  Whether that is a good idea or not will depend on your circumstances.