As pensions are normally only investment contracts designed for the long term there is no risk to the insurance company for health reasons and thus health does not present an issue. This is true whether the client is entitled to an occupational scheme run by the employer or they are thinking of contributing to a privately arranged Personal Pension.
Both Personal Pensions and Occupational Schemes have the ability to offer life assurance as a benefit within the scheme. Personal Pensions simply offer the same products as other people applying for life assurance but wrapped up in a different policy. Therefore the same underwriting issues apply as those encountered when applying for life assurance by itself.
A substantial benefit for those entitled to an occupational scheme or Group Personal Pension scheme through work, however, is the ability to obtain life assurance with simplified underwriting. A typical form for such cover would have just one question such as "Have you been off work for more than 2 weeks in the last 5 years?'" Many of you can answer no to this question and will thus qualify for the insurance, where in almost every other situation you would be turned down. Some company life assurance schemes have no personal questions at all.
We get many clients who do not see the point of having pensions if their health status would mean they have a low life expectancy, particularly if they cannot access funds until age 50 at the earliest. This is a misconception because improved medicines lead to increased longevity and more and more people are able to benefit from pension planning and the tax relief this gives. Furthermore, even if your health were to deteriorate then there are many circumstances (see section on unemployment cover for an example) when you would be able to access the benefits early.
Personal Pensions and III Health
If you have an HIV diagnosis and have a personal pension you can apply to take early retirement. In this situation you would take out the fund as it stands (together with any tax free cash you would be entitled to take). You will then be able to apply to an insurance company for an 'impaired life annuity.' This is about the only time you will be able to benefit from the insurance industry as a result of your health situation. It essentially means that you will get a greatly enhanced pension income, at a younger age, as a result of your diagnosis. Protected Rights Benefits cannot be accessed for any reason whatsoever, prior to age 60. Protected rights benefits are those benefits accrued in lieu of benefits under the State Earnings Related Pension Scheme, now called State Second Pension or S2P.
Occupational Pension Schemes
If you are entitled to an occupational scheme and have had to stop work due to ill health, you are entitled to apply to the trustees of the scheme for early retirement on grounds of ill health. In this situation the scheme will work out what you would have been entitled to, had you been able to work until retirement age, and give you that amount straight away, annually. This income is then guaranteed for the rest of your life. Even if you make a recovery and are able to return to work then you are still likely to be entitled to the ill health pension. Different schemes have different polices for ill health benefits. It is important to contact the benefits department or the trustees of the scheme to find out what these are.