Serious health issues?

15 May 2025

Life can throw unexpected challenges our way, and dealing with ill health is certainly one of them. It can be a time filled with uncertainty, both emotionally and financially. If you're facing health issues, which have limited your ability to work, you might be able to take your pension sooner than you realise.

Taking early retirement

If you’re no longer well enough to continue working in your current job but you’re still well enough to continue working in some way, for example continuing to work part time, you may be able to take early retirement. This applies whether you still work for the AA or you’re now working for another employer. The minimum age you can retire is 55, this will increase to 57 in 2028.

If you take early retirement on ill-health grounds you may be able to take your pension even if you’re below the minimum pension age (currently 55, rising to 57 in 2028). Taking early retirement means the amount of pension you receive each month is reduced because it’s likely your pension will be paid over a longer time period.

Serious ill-health retirement

If you’re no longer well enough to work at all then you may be able to take your pension early without the early retirement reduction, irrespective of age.

Terminal illness

If you’ve been told you have less than 12 months to live you may be able to take your pension entitlement as a single lump sum. Up to £1,073,100 is usually tax free.

For more information about taking your pension early due to ill health please read Section specific information on the Ill-health retirement page. Here you will find details for Staff, Management 1 and 2 and the CARE Sections of the Scheme, please refer to the Section you are a member of for information relevant to you.

Things to consider

• You’ll need to provide medical evidence;
• If you access your pension early on ill-health grounds, you’ll be asked to provide updated medical evidence periodically until you reach minimum pension age;
• If you’re over minimum pension age (currently 55, rising to 57 in 2028) then you can request early retirement without providing medical evidence;
• If you’re over 75 the tax arrangements for lump sum payments are different.

Other sources of income

If you have an income protection plan (also known as permanent health insurance), you need to seriously consider whether you choose to access your pension. This is because any income you get from your pension could reduce the payments from the income protection plan. You should also check whether accessing your pension may affect eligibility for state benefits.

For decisions involving a significant amount of money, we recommend speaking to an Independent Financial Adviser (IFA).

The Government’s MoneyHelper website includes a list of registered and impartial financial advisers as well as useful information about ill-health retirement and other options which may be available to you.

What should you do next?

If you want to take your AA Pension early due to ill health please contact the administrator.