Early Retirement Due to Ill Health

Taking early retirement due to illness can be one of the hardest decisions you will have to make. For many people, work is much more than a means to make money. It also provides an identity and sense of worth; interaction with colleagues and clients; stimulation and a routine to the day. For some people the loss of their employee status can be hard to adjust to, leaving no sense of purpose and too much time to think about their illness, whilst others may relish the opportunity to escape the stresses of employment and focus on activities they find more enjoyable.

If you have cancer and are in paid employment, your employer should support you and make reasonable adjustments to allow you to do your job during and after your cancer treatment. Legislation protects you from being treated unfairly at work because of cancer.

If you live in England, Scotland or Wales, the Equality Act 2010 protects you. The Disability Discrimination Act 1995 and its extension, the Disability Discrimination Order of 2006, protects you if you live in Northern Ireland. Macmillan Cancer Support has produced a comprehensive booklet called ‘Your rights at work when you’re affected by cancer’ for anyone (including carers) who want to know more about their rights at work.

If you feel that you are too ill to carry on working, it is important that you weigh up all the other options available to you, such as flexible or part-time working or voluntary redundancy, and make sure that if you do retire early you will be able to support yourself financially. Applying for ill health retirement can be a long process, so do bear this in mind if you decide to take this route.

How to apply for ill health retirement

If you are a member of a workplace pension scheme, and feel unable to return to work, you may be able to apply for ill health retirement (IHR). Whether you will be granted IHR depends on your pension provider, the scheme and their own definition of ill health. If you are seriously ill, and it is unlikely that you will be able to work again, you may be able to draw your pension benefits early, regardless of your age. You should speak to your employer and scheme administrator/pension provider to see if this is possible. Some employers, often smaller companies without a human resources department, may not have experienced a request for ill-health retirement before, so you may have to do your own research.

If you belong to a trade union they may be able to guide you and your employer through the process. If you do draw your benefits early, they may be lower than the benefits you would have received if you had continued working until your expected retirement date. Some schemes have two tiers of payment whereby retirement benefits may be paid without any reduction for early payment or may be enhanced to what would have been payable if the employee had worked until their normal retirement age. In cases, where your life expectancy is expected to be less than one year, the scheme’s rules may allow you to take the whole value of your retirement benefits as a tax-free cash lump sum.

A report provided by your Oncologist and an independent medical advisor (e.g. Occupational Health Doctor) are usually required. The Pensions Advisory Service website has further information on workplace pension schemes and ill health retirement, which you can access by visiting http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/ill-health

Qualifying conditions

Different schemes will have their own specific qualifying conditions, for example length of membership of the scheme and whether the employee is considered to be permanently incapable of undertaking their present duties or undertake any other regular work. Examples of the criteria under two schemes (NHS and Teachers) can be accessed by clicking on the links below:

http://www.nhsbsa.nhs.uk/Documents/Pensions/Ill_health_retirement_assessment_(V1)_03.13.pdf

https://www.teacherspensions.co.uk/members/resources/terminal-illness.aspx

State Pension

There is no provision for claiming your state pension early due to ill health, even terminal illness.

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