What medical conditions qualify for ill-health retirement?

This content was reviewed and approved by Tamlin Russell.

What is ill-health retirement?

Ill-health retirement, also known as medical retirement, occurs when an individual is unable to continue working until their pensionable age. This can be because of either a physical or mental illness, injury, or disability.

Unfortunately, ill health can scupper retirement plans, causing individuals to retire early. Luckily, there are measures in place for those out of work and facing ill-health retirement.

While many plan to take their pension when they reach retirement, there are options for those who are unable to wait until they hit pensionable age. After all, personal pensions and self-invested personal pensions (SIPPs) aren’t as restricted by a set retirement age in the same way the State Pension is. 

Instead of waiting until your late 60s, retiring under ill-health could entitle you to take a personal pension early. Otherwise, you can choose to access all or part of your pension fund, if you are in good health, by the minimum pension age set by HMRC. This is currently age 55 but is set to increase to age 57 in April 2028. However, you may have a protected early pension, aged below 55, if you started your pension before April 2006 and were in a special occupation.

What conditions qualify for ill-health retirement?

There are four main common impairments which qualify you for ill-health retirement:

1. Disability

The severity of your disability could force you into early retirement. In this instance and where you are part of a workplace scheme, you’ll need to communicate this with your manager and employer’s HR team.

Under the Equality Act 2010, you can’t be fired, made redundant or dismissed for having a disability. However, if you determine that meaningful work can’t be completed due to your disability, you’ll need to submit medical evidence in support of this to your employer.

2. Physical ill-health

Long-term physical ill health conditions, such as arthritis or diabetes, can affect your capacity to work. To some, these are also known as chronic illnesses.

If your physical ill-health is severe enough it could impact your ability to undertake the demands of a job, prompting medical retirement. 

Once you’ve raised your case and submitted evidence, your private pension provider might have set criteria you need to fall into before you can start claiming. These could include proof that you’re incapable of working or that there are no medical treatments available to help you return to work. 

3. Mental ill-health

Severe anxiety, post-traumatic stress and depression are all examples of mental ill-health that can affect your capacity to work. In some instances, these mental conditions might be grounds for medical retirement. Mental ill-health will need to be documented by your doctor and written evidence should also be submitted. 

4. Terminal illness

For those suffering from a terminal illness such as cancer or heart disease, it’s possible to receive your pension pot in full as a tax-free lump sum. In this circumstance, you’ll need written evidence that your life expectancy is less than one year.

You’ll also need to be under the age of 75 to claim your full pension tax-free. If you’re diagnosed with a terminal illness over the age of 75, your pension lump sum will be taxed as income.

Who is eligible for ill-health retirement?

Medical or ill-health retirement can only be awarded to someone who fits the criteria of HMRC, your pension provider and - if you are in a workplace scheme - your employer. Providers tend to have varying eligibility criteria, so it’s worth looking at the details of your policy and what the provider’s stance is before you make a claim. You will also need involvement from a doctor and, possibly, a solicitor.

HMRC ill-health retirement

HMRC offers specific eligibility criteria that must be completed and fulfilled before medical retirement can be confirmed.

The requirements are as follows:

• Written medical evidence sent to and received by the pension scheme administrator.
• Written medical evidence that the member is expected to live for less than one year or is medically incapable of continuing their occupation.
• The individual ceases working.

Medical evidence

Medical evidence from a doctor is the most important part for those looking at ill-health retirement, as you’re unlikely to receive medical retirement status without it. 

From the medical evidence supplied, you’ll need to satisfy your provider’s criteria for medical retirement. Your pension provider will share any qualifying criteria with you, and you might be asked to supply additional evidence in some cases. Alternatively, you’ll get entered into a tiered system if you’re part of a Local Government Pension Scheme. This system will determine if you have a serious ill-health condition (SIHC), such as a terminal illness, which could mean all your pension benefits can be paid to you as a tax-free lump sum.

How to apply for ill-health retirement

Applying for ill health retirement is never a decision that’s taken lightly and requires input from you, a doctor and, if you are in a workplace scheme, your employer. Below we have detailed five key steps for those entitled to medical retirement to help the process go as smoothly as possible.

1. Liaise with your financial adviser

Retiring earlier than you’d planned can be expensive. It’s for this reason that we always advise speaking to your financial adviser. Whilst you might not have a choice to retire, they will offer supportive and friendly advice for what to do next. 

2. Contact your employer or pensions provider

If you feel your illness or disability is going to affect your capacity to work, you must communicate this with your employer. Doing so will start the motion of medical retirement. You should document every conversation with your employer, so you have a record of everything that has been said. Alternatively, you can speak to your personal pension or SIPP provider, who will be able to assist with your claim. They’ll walk you through everything you need to do, taking some of the stress away from ill-health retirement.

3. Secure medical evidence

Any supporting evidence must be provided by a registered medical professional who is licensed to operate. If you have a personal pension or SIPP, your provider can request this evidence from your GP, but only if you give permission to do so.

You should also have the option to see the report before your provider reviews it if you wish. In a workplace scheme, it’s possible that your employer might also seek advice from an occupational health expert.

4. Receive and store documentation

It’s important to note that any evidence and documentation will need to be stored for at least six years. Pension providers will need a record and might require you or your family to hold a copy too.

5. Start accessing your pension

If your claim is successful, you’ll be able to start accessing your pension. 

Speaking to a financial adviser

Before making any decisions around pensions, annuities, or retirement plans, it’s important to speak to a financial adviser first. They’ll be able to take a deep dive into your financial situation and make unbiased recommendations on products to best suit you, and can advise on the following:

Enhanced annuities

An enhanced annuity could be ideal if you need to take ill-health retirement, especially if you are aged 55 or older. A lump sum is paid from you to a provider, offering you a regular income. You can receive an enhanced annuity if you’re experiencing poor health or a life-limiting illness.

Fixed term annuities

Medical retirement can be unexpected, which is why preparing for any eventuality is important. With a fixed term annuity, you can receive a guaranteed income without committing to a lifetime scheme. What’s more, you can select the level of flexibility you need and are in total control of your plan.

Pension schemes

Ensuring you are signed up to a workplace or private pension scheme, especially earlier on in your working life, will give you flexibility as you get older. You may also be eligible for a State Pension alongside any private pension.

If you’re looking for a personal pension or a self-invested personal pension (SIPP), this is something we can help you with at LV=. 

Additional Savings

Every little helps when saving for retirement, which is why additional savings are always a good idea. Before reviewing products on the market, speak to your financial adviser and work out what you can afford to put away each month that you won’t need to access.

Can LV= support those retiring due to ill-health?

Absolutely, At LV= we recognise that ill-health retirement comes with a lot of worry and complication, which is why we offer a selection of services that can help you. Request a callback today so we can help you find the right solution for your circumstances.

Report data source information

*LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in June 2024.