I’m terminally ill at 60 so will my state pension just be lost?

I have been diagnosed as having terminal cancer and as a 1950s woman I am unable to now draw a state pension until I am 66 (in six years’ time) which would be a miracle for me to reach.

I have worked full time until I had to take ill health retirement, just over a year ago, so I have paid enough contributions to get a full state pension.

Will my pension just be lost into the system, which I have found flawed and unsupportive when needed, or can either myself or my family claim anything for the years paid into it?

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Worked full time and paid NI: But I’m terminally ill at 60, so will my state pension just be lost? (Stock image)

Steve Webb replies: I was very sorry to read about your recent diagnosis.

With regard to the National Insurance system, the way in which the system works is that this year’s contributions paid by workers are used to pay this year’s retirement pensions and other NI benefits (plus a small amount that goes towards the NHS).

This means that there isn’t a literal pot of money with your name on it that would be available to your family if you did not reach state pension age.

However, there are a few ways in which you or your family members might get something back from the state system.

First, there are certain benefits which you may be able to claim as someone who has had a diagnosis of terminal illness, particularly if your life expectancy is relatively short.

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These are not dependent on your record of NI contributions, but they would at least mean you were getting some money ‘out of the system’ having put so much in.

You still have to satisfy certain conditions but you should find that your claim is processed more quickly and you have to jump through fewer hurdles.

The charity Marie Curie has provided a helpful guide to benefits for people who are terminally ill here. 

Second, in terms of the National Insurance system, if you were to die before pension age and if you have a spouse or civil partner under pension age, they would be able to claim a ‘Bereavement Support Payment’.

This is a lump sum (which can help with things like funeral costs) and a monthly payment which runs for 18 months.

The standard rate is currently a lump sum of £2,500 and a monthly payment of £100. A higher rate is payable to those who have dependent children.

Finally, if your state pension forecast shows that you were set to receive an amount in excess of the full flat rate (currently £168.60), then half of any excess can potentially be inherited by a surviving spouse when they reach state pension age.

I appreciate that your question was primarily about your state pension rights, but it is worth saying that if you are a member of an occupational pension scheme, they may well have special rules for those who are terminally ill.

For example, if you have not reached the normal pension age for the scheme, they may still allow you to draw a pension immediately and without any reduction, though this will depend on the rules of the individual scheme.

I hope that this is helpful and wish you and your family well.