Pensions: Terminal Illnesses

(asked on 6th July 2021) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussions he has had with insurance companies on improving early access to pension pots for people diagnosed with terminal illnesses.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 12th July 2021

An individual cannot usually access their pension pot before normal minimum pension age, currently age 55. However, the Government allows members to access their pension earlier than this age on the basis of ill-health.

In 2016 the Government made changes to enable people with less than a year to live to take any pension savings up to the value of the lifetime allowance as a tax-free lump sum. Dependent on pension scheme rules, if an individual is seriously ill and expected to live for less than one year, they may be able to take their entire pension pot as a tax-free serious ill-health lump sum.

Further, dependent on pension scheme rules, people who have more than a year to live but are medically incapable of continuing their current occupation as a result of injury, sickness, disease or disability may access their pension early and not be subject to an unauthorised payment charge.

There are no plans to change these tax rules, but all aspects of the tax system are kept under review in the context of the wider public finances. The Treasury continues to have discussions with a variety of stakeholders about different parts of the tax regime.

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