What medical conditions qualify for ill health retirement in the UK?


Ill Health Retirement | December 2023

If a health condition prevents a person from continuing to work, sometimes it is best to take ill-health retirement. 

This means retiring early before the expected pension age, due to said health condition. It is important to remember that this decision will have an impact on one’s life, from lifestyle and financial security to wellbeing. 

Topics that you will find covered on this page

1. Understanding Ill Health Retirement

Ill health retirement, sometimes called medical retirement, is a step taken when an individual’s health condition prevents them from carrying on their work.

This results in them retiring before reaching state pension age. It’s a path worth considering, depending on whether your health has a significant impact on your ability to work.

Medical retirement is a recognised process in the UK. It offers individuals who are not in a position to continue their employment, due to health issues, an opportunity to retire early. When making this decision, it is best to carefully consider all of its potential effects on your life. 

Ill health retirement sometimes comes with financial support. This is likely to be an ill health retirement pension, which is a form of an ill health benefit. This aims to offer a regular income, providing financial support for those who have retired early due to a health condition.

Retirement due to ill health is not a decision to be taken lightly. Although the prospect of early retirement may seem appealing to some, it’s necessary to fully understand the impact this will have on your life and your finances. 

2. What Medical Conditions Qualify For Ill Health Retirement?

Below is a broad list of medical conditions that might be considered for ill health early retirement. 

Remember though, the presence of a condition doesn’t automatically qualify someone; the severity, permanence, and impact on the ability to work are crucial factors:

1. Neurological Conditions

   – Multiple sclerosis

   – Parkinson’s disease

   – Severe and advanced neuropathies

   – Significant traumatic brain injuries

2. Cardiovascular Diseases

   – Severe heart failure

   – Severe coronary artery disease not amenable to intervention

   – Uncontrolled severe hypertension

3. Musculoskeletal Conditions

   – Severe osteoarthritis

   – Chronic severe back conditions which have not responded to treatment

   – Rheumatoid arthritis and other inflammatory joint diseases in advanced stages

   – Severe osteoporosis with recurrent fractures

4. Respiratory Diseases

   – Chronic obstructive pulmonary disease (COPD) in advanced stages

   – Severe asthma that remains uncontrolled despite treatment

   – Advanced pulmonary fibrosis

5. Mental Health Conditions

   – Severe depression or bipolar disorder resistant to treatment

   – Schizophrenia and other major psychotic disorders where control is not achieved

   – Severe post-traumatic stress disorder (PTSD)

6. Cancers

   – Advanced cancers with limited prognosis

   – Cancers with significant disability post-treatment

7. Endocrine Conditions

   – Poorly controlled diabetes with frequent hospitalizations or complications

   – Severe thyroid disorders uncontrolled by treatment

8. Kidney Diseases

   – End-stage renal disease requiring dialysis

   – Chronic and severe kidney conditions not amenable to treatment

9. Liver Diseases

   – Cirrhosis with complications such as ascites, variceal bleeding, or encephalopathy

10. Sensory Impairments

    – Severe and progressive vision loss not amenable to correction

    – Severe hearing loss not corrected by aids

11. Digestive Disorders

    – Severe inflammatory bowel diseases uncontrolled by treatment

    – Severe chronic liver diseases

12. Immunological Conditions

    – Advanced stages of HIV/AIDS

    – Severe and recurrent autoimmune conditions

13. Other Chronic Conditions

    – Conditions leading to recurrent visits to the hospital

    – Conditions that have led to significant, lasting physical or cognitive impairments

14. Disabling Injuries

    – Significant traumatic injuries leading to lasting impairments

    – Injuries leading to paralysis, amputation, or severe functional limitation

Remember, the criteria for ill health retirement can be strict. The condition must not only be severe but often must also be permanent or long term and significantly impact someone’s ability to perform their job duties.  

3. Eligibility Criteria for Ill Health Retirement

There are several factors which affect eligibility to take medical retirement. 

The most significant is, as expected, the individual’s health condition. Medical evidence is required, typically from a medical adviser or doctor. This aims to show that an illness or disability makes a person permanently unable to carry out their own job, such that further treatments will not enable a return to work. 

This may involve providing fresh medical evidence, or further additional medical evidence if health conditions change. 

In addition to the medical condition, other factors can influence eligibility. These include the individual’s age, the nature of their job, and their employment status. The decision on eligibility is usually made by the pension scheme or the pensions agency.

It’s worth noting that the eligibility criteria may vary between different pension schemes, for example, with the NHS Pension Scheme, which has specific criteria for ill health retirement. As a result, it is important to check your pension scheme carefully. Support from an independent financial adviser should be considered.

4. Process of Applying for Ill Health Retirement

Applying for this retirement involves several steps. 

The first is to gather all the necessary medical proof, then submit this evidence to the pension scheme or provider for review. 

Once the application is submitted, it’s reviewed by the pension provider. Before making a decision, they may request further information or clarification. Although the time it takes for this to be undertaken varies, it is usually finalised within a few weeks. 

If the application is approved, the individual will be granted their early retirement on the grounds of ill health. Once this has been accepted, they will start receiving their pension. Alternatively, if the application is rejected, it may be possible to appeal the decision. 

5. Legal Aspects of Ill Health Retirement

The laws and regulations surrounding ill health retirement aim to ensure that individuals are treated fairly. They provide guidance for employers and pension providers, as well as protecting individuals who retire early due to ill health. 

In the UK, employers are required to make reasonable adjustments to accommodate employees with health conditions. Additionally, the law also provides protection from discrimination based on health conditions. If these adjustments are insufficient to allow the employee to continue working, ill-health retirement may be considered. 

The law provides guidelines on how pension benefits should be calculated for ill health retirement. This includes provisions for a tax-free lump sum payment, usually taking a portion of the pension pot. If your life expectancy is less than a year, you may be entitled to take a larger portion of your pension pot, if not all. 

Again, as legal aspects of ill health retirement can be complicated,  it is advised to seek out an independent financial adviser. An adviser can provide support with understanding rights and obligations of medical retirement.

early retirement due to ill health

6. Financial Implications of Ill Health Retirement

There are financial implications from retiring early, for any reason. A concern for many is the impact on pension savings. Early retirement can mean a reduced pension pot, potentially impacting the individual’s financial security in retirement.

However, there are provisions in place to help mitigate these impacts. For instance, it is possible to receive an enhanced pension for those who retire early due to ill health. This means receiving a higher pension payment than the state pension. 

A lump sum payment is another possible option for boosting pension savings. This payment is typically tax-free, potentially offering a significant advantage. 

7. Impact on Pension and Benefits

Despite retiring early on medical grounds, ill health retirement can still have an impact on the amount of pension someone receives. 

For instance, those who retire early may receive a smaller pension pot than they would have if they had worked until their normal pension age.

As stated previously, there are options which might prevent this from having a significant impact. 

An example of this is enhanced annuity. This type of pension pays out a higher amount each year, helping to provide additional financial security. Also, it is important to note that lump-sum payments can be provided without having to pay tax. 

It’s also essential to emphasise that ill health retirement can affect other state benefits. For instance, those who retire early may be eligible to claim a State pension early. However, this can affect other benefits, making it necessary to seek independent financial advice before making a decision.

"Consultation with a financial advisor is highly recommended for understanding the interplay between disability retirement and state pension."

8. Support Services for Ill Health Retirees

Financial advice services are one of many support services available for those retiring due to ill health. They can be helpful for fully understanding the implications of receiving benefits early, due to ill health. 

Another support service includes health and wellbeing services, supporting individuals to deal with the physical and emotional impacts of ill health retirement. For example, counselling services, support groups, and health and fitness programmes.

In addition, some organisations provide support and advice for those considering ill-health retirement. These can provide valuable information and resources, helping individuals to make informed decisions.

9. Adjusting to Life After Ill Health Retirement

It’s not always easy to adjust to life after ill health retirement. Retiring early due to ill health is a significant life change, potentially resulting in many emotions. From the relief of no longer having to struggle with work, to the uncertainty about the future, it requires some levels of resilience and balance.

One of the key aspects of this adjustment is managing one’s health condition. This might involve making more frequent trips to the GP, taking medication, and making lifestyle changes. Maintaining a healthy lifestyle can play a large role in managing health conditions and improving quality of life in retirement.

Another important aspect is financial management. As your finances shift from your regular income to a retirement pension, it’s important to budget carefully and manage finances wisely. In this regard, seeking advice from a financial adviser can be beneficial.

The importance of maintaining your social network shouldn’t be overlooked. Maintaining relationships with family and friends, whilst also making new connections through exercise or social clubs, can provide emotional support and improve wellbeing.

10. Physical and Mental Wellbeing in Retirement

Maintaining physical and mental wellbeing in retirement is crucial, especially for those who have retired due to ill health. However, mental wellbeing should not be overlooked, being of equal importance. It’s common for individuals to struggle with the change from work to ill health retirement, sometimes feelings of loss and grief being associated with the change. 

However, seeking support from mental health professionals, joining support groups, and staying socially connected can help manage these feelings. It’s also important to engage in activities that offer a sense of meaning during retirement, providing a sense of purpose and enhancing mental well-being.

11. Resources and Organisations for Ill Health Retirees

There are multiple organisations which seek to help those who have retired and are experiencing challenges with the move from working life to retirement. These include Age UK, providing information and advice on various topics, including pensions and benefits.

The NHS also provides resources for managing health conditions in retirement. Some organisations provide support specifically for those who have retired on ill health grounds, such as the Disability Rights UK.

Seeking necessary support is essential to help with the transition, whilst also ensuring that your mental well being is looked after. Ill health retirement is a significant life change, and it’s important to have the right support and information to navigate this journey successfully.

12. Decoding the Criteria of Ill Health Retirement

When considering ill health retirement, it is important to understand the necessary qualifications to receive this. The main factor in the UK is the inability to perform one’s job due to a permanent ill health condition, meaning that the individual cannot continue their present employment due to a medical condition which is unlikely to improve.

While having a serious ill health condition is a significant factor, it’s not the only reason for early retirement. Other considerations, such as the individual’s age and the nature of such employment, are considered. Ultimately, it is the pension scheme administrator who grants the individual ill health retirement. Therefore, the factors are likely to change slightly between schemes. 

13. The Role of NHS Pensions in Ill Health Retirement

One of the largest in the UK, the NHS Pension Scheme offers specific provisions for ill health retirement. Those qualifying for early medical retirement under the NHS Pension Scheme can receive enhanced benefits, including a higher pension and a tax-free lump sum.

For those who have dedicated their lives to public service, NHS pensions are designed to provide financial security to such people who are unable to continue their work due to health reasons. The benefits are calculated from the individual’s prospective service until their normal retirement age.

The requirements for the NHS Pension Scheme are specific. To qualify for ill health retirement under the NHS Pension Scheme, an individual’s medical condition must make them permanently incapable of efficiently performing their duties.This decision is made based on medical evidence reviewed by medical advisers appointed by the NHS Pensions Agency.

14. Ill Health Retirement and Universal Credit

Universal Credit benefits those out of work or on a low income. It’s designed to help cover living costs and can be claimed by those who retire early due to poor health. Often Universal credit and retirement benefits intersect, making it important to understand this inter-section. 

Universal Credit considers the total income of an individual, including the ill health retirement benefits if received. This means that receiving a pension could affect the amount of Universal Credit one is eligible for. Therefore, it’s vital to seek advice before making any decisions.

Those who retire early due to ill health may be eligible for other benefits. These include Personal Independence Payment (PIP) and Employment and Support Allowance (ESA), designed to help those with health conditions or disabilities.

15. Navigating the Journey of Early Retirement Due to Ill Health

Although taking the steps towards early retirement due to ill health can feel daunting, it is a transition which many people have previously navigated. Therefore, there are many resources available to understand the impact this decision will have. The first step is understanding the process and knowing what qualifies for ill health retirement.

Having a support network is crucial during this time. This support could come from family and friends, a dedicated support group, or professional financial or legal advice.

Finally, it’s important to remember your health and wellbeing. This could involve taking up activities that are fulfilling, maintaining a healthy lifestyle, and seeking professional help to manage health conditions. 

Frequently Asked Questions

1. How can I apply for medical retirement and what are the ill health benefits?

Applying for medical retirement, also called ill health retirement, involves a formal process. You must provide substantial medical evidence to your pension provider which indicates that you cannot continue to work due to health reasons. 

Once an application has been accepted, Ill health benefits should assist you financially. The primary benefit is the ill health pension, providing a regular income. In some cases, you might also be eligible for a tax-free lump sum payment or higher payments, which can be a significant financial relief.

2. How will early payment from my workplace pension affect my tax?

From receiving an early payment from your workplace pension due to ill health retirement, your tax may be affected. Normally, you can take 25% of your pension pot as a tax-free lump sum, but the rest is taxable. Consequently, when you begin to receive pension payments, they will be subject to income tax.

Tax rules are often complicated and vary from person to person. For example, if you’re terminally ill with less than a year to live, you can take your whole pension pot as a tax-free lump sum. Seeking professional guidance to fully understand these implications is always advised.

3. What does voluntary early retirement entail and how does it affect my personal pension?

Voluntary early retirement is when you choose to retire before your normal pension age. This could be due to various reasons, including health issues. It’s important to understand that retiring early might result in a smaller personal pension, as you’re drawing from your pension pot earlier than planned.

It is slightly different if you retire early due to serious illness, as you may qualify for enhanced benefits. This includes higher pension payments or a tax-free lump sum, helping to balance some of the financial impact of early retirement. This will vary depending on your pension scheme rules and circumstances, so it is advised to look into this carefully.

4. When can I expect to be paid if I retire early due to ill health?

Once your application for ill health retirement is approved, you can start receiving your pension benefits. The timeline for this can vary depending on your pension scheme. Some schemes may offer an early payment option, allowing you to access your pension benefits shortly after your application is approved.

Note that these benefits may be paid early, as a regular income (pension) or as a cash lump sum. This is dependent on your pension scheme and individual ill health conditions.

5. Can I get an additional pension if I retire due to a serious illness?

If you’re retiring due to a serious illness, you may be eligible for an enhanced pension or additional pension benefits. You are likely to qualify if your health condition is such that you are unable to reach the normal retirement age. Therefore, the goal is to provide additional financial support to those facing these challenging circumstances.

What you are entitled to will vary depending on your pension scheme and the nature of your illness. In some cases, you might be able to take your entire pension pot as a tax-free lump sum. Particularly if you’re terminally ill. This is why seeking advice is important.

Meet the author

William Jackson

William is a leading writer for our site, specialising in both finance and health sectors.

With a keen analytical mind and an ability to break down complex topics, William delivers content that is both deeply informative and accessible. His dual expertise in finance and health allows him to provide a holistic perspective on topics, bridging the gap between numbers and wellbeing. As a trusted voice on the UK Care Guide site, William’s articles not only educate but inspire readers to make informed decisions in both their financial and health journeys. 

Review of Article

This article has been reviewed by Saq Hussain, who is a pension and financial expert, with over 25 years experience of the financial services industry. Saq has regualrly featured in the UK press commentating on financial and specifically pension and retirement related issues. 

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