Chancellor John Healey. Picture by Alecsandra Dragoi / Treasury
The government has confirmed it will make changes to HM Revenue and Customs’ definition of terminal illness to make it easier for people at the end of their life to access their pension savings.
The move – announced earlier this month but confirmed in the Budget today (28 October) – will be introduced through the Finance Bill 2026-27 and will also allow for overseas registered medical practitioners to provide medical evidence.
When it announced the changes on 15 October, the Department for Work and Pensions (DWP) said the change will see a shift from a requirement for medical evidence that an individual is expected to live for less than one year, to the slightly more flexible test that death can reasonably be expected within 12 months.
It said this brings pension tax rules more closely into line with the 12-month end-of-life definition already used by the DWP.
The DWP said that, under current rules, it can be easier for someone with a terminal illness to access their benefits than it is to access their own pension savings – adding that these changes will bring the two systems into closer alignment, so that people are not faced with unnecessary extra hurdles.
Improved access
Standard Life product director Jenny Holt said the move was a "welcome and compassionate change" which should make it easier for people facing terminal illness to access their own pension savings when they need them most.
She said: "Moving away from a rigid requirement that someone is expected to live for less than a year may sound like a subtle distinction, but in practice it should give medical professionals greater flexibility and help remove an unnecessary barrier for people at an incredibly difficult time.
"Our own research and user testing has shown that people dealing with serious illness want clearer information, straightforward guidance, and confidence that they are accessing the right option for their circumstances. We have also seen how differences in the medical evidence required by different systems can create additional paperwork and potential delays. Greater alignment between pension and benefit rules is therefore an important step towards making the process simpler and more consistent.
"Allowing evidence from overseas registered medical practitioners should also help remove unnecessary hurdles. Ultimately, the goal should be that people facing terminal illness can access the money and support available to them as quickly and simply as possible, allowing them to focus on themselves and their families rather than navigating administrative processes."
