You may be able to cash in a pension early because of ill health. HMRC allows it when strict medical conditions are met, and your scheme's rules apply too.
If you or someone close to you is seriously ill, help with the illness comes first. Macmillan's Support Line (0808 808 00 00), open 7 days a week from 8am to 8pm, offers confidential support to people living with cancer and those close to them. Marie Curie (0800 090 2309) gives practical and emotional support about terminal illness and end of life.
On the money side, MoneyHelper's Pension Wise service is free, impartial and backed by government. It sees people under 50 retiring early due to poor health, as well as anyone aged 50 and above, provided their defined contribution pension is UK-based.
To talk it all over with one person instead, try the form on this page: pots, tax, benefits and family can then be weighed side by side, unhurried and without charge, by an FCA-authorised adviser over the phone.
Can I cash in my pension due to ill health?
You may be able to, before the normal minimum pension age, if you meet what HMRC calls the ill-health condition. Its Pensions Tax Manual (PTM062100, updated 9 October 2026) treats pension payments made below that age as authorised once the condition is satisfied. The minimum age is 55 today and rises to 57 from 6 April 2028, so the test matters most to anyone younger.
Two things must both be true. Your scheme administrator must hold evidence that you are, now and in future, unable on medical grounds, physical or mental, to carry on your current occupation because of injury, sickness, disease or disability. And you must stop doing that occupation. A registered medical practitioner has to provide that evidence.
Passing this test does not oblige your scheme to pay. The manual puts it this way: "The ill-health condition is the minimum requirement set by the tax legislation. In practice, scheme rules may have stricter ill-health criteria." A scheme might, for instance, require that you cannot work in any occupation at all, not just your own, so a provider can turn down someone who meets the tax test.
For a defined contribution (money purchase) pot, PTM063300 allows an uncrystallised funds pension lump sum below the minimum age where the ill-health condition is met: 25% of it is paid tax-free unless that first 25% exceeds the permitted maximum, and the other 75% is taxed as pension income. Because the condition allows pension payments early, a pension through drawdown or an annuity can also start early if the scheme offers it, and enhanced annuity rates explains how health can affect annuity income. An invested pot can go up or down in value until the money is taken, MoneyHelper points out, so what you can draw might be higher or lower than expected. Your defined contribution options sets out the choices, and tax on ill health pensions covers the tax.
Can I cash in my pension if I am terminally ill?
You may be able to take all of it as a serious ill-health lump sum, which has rules of its own. HMRC sets no minimum age for this payment, but every condition in PTM063400 has to be met. First, before paying, the scheme administrator must have written confirmation from a registered medical practitioner that you are expected to live for less than one year.
Second, for payments on or after 16 September 2016, the lump sum must extinguish all the uncrystallised rights in that arrangement. Where part has been crystallised already, the manual says: "If only some benefits have previously crystallised, then the full remainder of uncrystallised rights under the arrangement must be commuted for the serious ill-health lump sum." A drawdown fund counts as one you are already entitled to draw from, even if you are taking nothing from it. So this route pays out what is left in that arrangement in one go; it is not a way to take part of it.
GOV.UK's early retirement guide says your whole pot may come to you tax-free if all of these apply:
- serious illness means you're expected to live less than a year
- you're under 75
- your whole pension pot does not go above your lump sum and death benefit allowance
The same guide warns that at least 50% of a pot may be held back for a spouse or civil partner by some pension funds, and asks readers to check with their provider. What can pass to a partner or family is in pension death benefits.
How is a serious ill-health lump sum taxed under 75 and from 75?
Two things set the tax: your age on the day it is paid, and its size against your allowance. PTM063400 sets it out as follows:
| Your position when it is paid | Tax treatment |
|---|---|
| Under 75, lump sum no more than the permitted maximum | No charge to income tax on either the member or the scheme administrator |
| Under 75, lump sum more than the permitted maximum | The part above the permitted maximum is treated as pension income and taxed at the member's marginal rate |
| Aged 75 or older | The lump sum is treated as the member's pension income and taxed at their marginal rates |
The permitted maximum is whatever remains of your lump sum and death benefit allowance. GOV.UK gives that allowance as £1,073,100 and names a lump sum taken because of serious illness as one of its uses (read 22 October 2026). Any lump sum counting towards the ordinary lump sum allowance counts towards this one as well, your use is added up across all your pension schemes, and a protected allowance may raise the limit. More is in the lump sum and death benefit allowance.
Where part or all of the payment is taxable, whoever pays it deducts the Income Tax through PAYE. How that lands for you turns on your other income and earlier lump sums. Working it out together, by phone and free, is something to ask the FCA-authorised adviser who replies to the form on this page.
Personal pots, final salary schemes and more than one pension
Both tax routes sit beneath your scheme's own rules, and the kind of pension changes what is paid. HMRC explains that from a money purchase arrangement the serious ill-health lump sum is the money held in it, while a defined benefits scheme has to put its own capital value on the pension being given up.
- Defined contribution (personal pensions, SIPPs, workplace pots). There is a fund to pay out, so the routes above can apply. Which of them a provider offers early, and the forms and evidence it asks for, are for that provider to decide.
- Defined benefit (final salary, career average). The scheme's own ill-health test and benefit levels apply. Ill health retirement in the UK covers those tests, final salary pensions the basics, and cashing in an NHS pension the NHS scheme.
- More than one pension. Each has its own rules and paperwork, so someone with a workplace scheme and an old personal pension contacts both.
Schemes may pay different levels of ill-health pension according to how incapacitated the member is, and GOV.UK says payments might be higher if you take your pension early because of a health condition. Untangling which pension is which, and what each might pay, can be part of the same phone call: an FCA-authorised adviser can sort through every pension you hold, beginning with whatever you put in the form on this page.
Protected pension ages are a separate route
A protected pension age has nothing to do with health. PTM062100 names it beside ill-health retirement as the exceptions: otherwise, paying a pension before the minimum age counts as an unauthorised payment, with the tax that brings. GOV.UK links a protected age to having had the right to take your pension before 55 under a scheme you joined before 6 April 2006. It has its own page, protected pension age. If anyone offers to release your pension early without either route, read early withdrawal charges and pension scams before doing anything.
Means-tested benefits and free guidance first
GOV.UK warns that taking a pension early could change the amount you get from income-related benefits, and that someone leaving work early through ill health may be able to claim other benefits. Benefits alongside ill health retirement goes through each one. A free Pension Wise appointment explains the options for a defined contribution pot, and pension withdrawal covers the general rules on cashing in.
What people ask about medical evidence, drawdown and refusals
Can I take a serious ill-health lump sum if I have already started drawdown?
Only from the part not yet crystallised. HMRC treats a drawdown fund as already in payment, even if nothing is being drawn, and the lump sum must take every uncrystallised right left in that arrangement.
Who has to provide the medical evidence?
A registered medical practitioner, which PTM062100 defines as a fully registered person within the meaning of the Medical Act 1983 who holds a licence to practise under that Act. For someone in the UK, HMRC would always expect the evidence to come from a UK registered practitioner; for a member overseas, a certificate from someone with equivalent overseas qualifications may be accepted.
Do I have to stop working to use the ill-health condition?
You must stop carrying on the occupation you can no longer do; that is the second half of the condition. Whether your scheme also expects you to leave your employer is set out in its rules.
Can a provider refuse if I am seriously ill?
Yes. HMRC's test is a minimum, and a scheme may apply stricter criteria of its own. An FCA-authorised adviser, reached through a free enquiry, can talk through how your own provider may weigh your medical evidence.
Is a terminal illness lump sum the same as the 25% tax-free cash?
No. Ordinary tax-free cash is usually up to 25% of what has built up, and the lump sum allowance caps it at £268,275, according to GOV.UK. A serious ill-health lump sum can be the whole uncrystallised pot and is measured against the larger £1,073,100 allowance; see taking your tax-free lump sum.
Getting the paperwork started
Ask each provider or scheme for its ill-health or serious ill-health process and the evidence it needs, then ask your GP or consultant what they can supply. If you want pensions, tax, benefits and family looked at in one sitting, an FCA-authorised adviser will cover them by phone with no fee for the conversation; it begins with the form on this page.
Sources: HMRC, Pensions Tax Manual PTM062100, PTM063300 and PTM063400 (each updated 9 October 2026); GOV.UK guides on early retirement (pension and benefits chapters) and on the lump sum allowance; MoneyHelper pages on Pension Wise and drawdown; Macmillan Cancer Support; Marie Curie. All read 22 October 2026.