Can You Claim Benefits If You Take Early Retirement?
If you are someone who has taken early retirement, you may be keen to know if you can claim benefits if you take early retirement (which is usually considered when you are in your 50s). To provide a detailed view of the topic, we will also explore other financial support that you may be able to claim due to early retirement as well as the qualifying criteria for benefits when someone takes an early retirement for medical reasons.
Can You Claim Benefits If You Take Early Retirement?
Yes, you can claim some welfare benefits if you take early retirement. However, to qualify for benefits after early retirement, the following factors will be assessed by the DWP while assessing your claim application:
- your age at the time of retirement
- your income (if any) and savings
- the reason(s) for your early retirement
- whether or not you have a medical condition or disability
Based on the evidence that you provide in support of any of these factors, you may be able to claim the following welfare benefits:
You can claim Housing Benefit or the housing element of Universal Credit if you are going to be on a low income and your savings are less than £ 16,000 after taking early retirement. If you qualify for Housing Benefit, the amount that you receive will be able to cover the expense of your rent (if not completely, then partially).
If you qualify for Universal Credit based on your low income, you may also be able to claim the Cost of Living payment. This is a £650 payment made in two separate instalments of £326 and £324.
Claiming Universal Credit may also make you eligible for Cold Weather Payment. However, you would also need to meet the additional qualifying criteria of having a health condition or disability due to which you have been assigned limited capability for work by the DWP or there is a child younger than 5 years old who lives with you.
In addition to this if you are under State Pension age, unemployed or working for less than 16 hours per week you may be able to claim Jobseeker’s Allowance. Additionally, you should have made sufficient National Insurance contributions over the recent 2 to 3 years.
If someone has taken early retirement due to a health condition or disability, they may also be able to claim New Style Employment and Support Allowance. However, the claimant must be able to provide proof of the disability or health condition that forms the basis of their claim and impacts the number of hours that they can work.
While you may not be able to claim your State Pension until you reach State Pension, you may be able to claim Pension Credit if you have a partner who is claiming Housing Benefit for people above the State Pension age.
Can You Get Help From The Council If You Take Early Retirement?
Yes, in some cases you may be able to get financial support from your local council authorities if you take early retirement. For instance, if you are a council or social housing tenant, the council can help you with rent arrears if you are on a low income due to early retirement.
They can offer convenient options such as a payment plan to clear your rental dues and make future payments easier. In such a case, social renters pay an extra amount above their usual rent to cover their arrears.
If you are on Housing Benefit or Universal Credit, you may simply have your payments transferred to your landlord for payment of your rent through Direct Debit or a Standing Order.
If your Housing Benefit or Universal Credit payments do not cover the entire amount of your rental expense, you can apply for a Discretionary Housing Payment through your local council. This is additional money that the council can provide to you so that you can meet your rent payments or arrears (if you have any) and does not need to be returned to them. If you are on Housing Credit or Universal Credit, you can ask your local council for a DHP form.
What Benefits Can You Claim If You Take Early Retirement Due To Ill Health?
If you take early retirement due to ill health or you are medically retired, you can claim the below-listed benefits:
- Statutory Sick Pay
- Employment Support Allowance
- Universal Credit
- Personal Independence Payment
- Council Tax Reduction
If you are medically retired, you can claim Statutory Sick Pay for £99.35 per week. This will be paid by your employer for a maximum of 28 weeks if you are declared too ill to work by a medical practitioner.
For extended financial support, you can check if you are eligible for New Style Employment and Support Allowance. However, this benefit has been replaced with Universal Credit in many areas.
You can claim Universal Credit to top up your income when you are sick and require medical care. However, if you intend to claim both SSP and Universal Credit, the amount that you claim through SSP will be taken into account by the DWP when you file a claim for Universal Credit.
If you are getting your weekly payment of £99.35 for SSP and need financial support to meet your housing costs, you can claim Housing Benefit (this is being replaced with Universal Credit) for expenses such as rental payments.
In addition to this, you may be able to qualify for a council tax reduction based on your health condition and being on a low income. This will help to get you a discount on your annual bill for council tax payments.
If your health condition prevents you from performing everyday tasks, you can claim Personal Independence Payment. Since this is a non-means-tested benefit, your claim of other benefits or your income will not affect your eligibility for PIP.
While you cannot claim State Pension if you are medically retired, you can claim your pension from a private pension scheme. In some cases, pensioners can claim a higher amount due to their medical condition.
The above discussion fairly concludes that individuals who take early retirement from work can claim state benefits as long as they meet the eligibility criteria. If the early retirement is on medical grounds, they can claim additional benefits for financial and medical support. However, they will have to wait till they reach the State Pension age so that they can claim their State Pension (among additional benefits).
FAQs: Can You Claim Benefits If You Take Early Retirement?
What benefits can I claim when I retire in the UK?
You can claim Housing Benefit, Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Pension Credit, and Universal Credit when you retire in the UK.
Do I need to inform HMRC if I retire early?
If you are a salaried employee, your employer and pension provider will inform the HMRC if you retire early. However, you can also do so to avoid any overpayments. If you are self-employed and retiring early, you must inform the HMRC directly.
Do I pay National Insurance on my private pension if I retire at 55?
No, you do not pay National Insurance on your private pension if you retire at 55. You will also not have to make NI contributions from State Pension or workplace pension (if you get any).
Does council tax reduce when you retire?
No, council tax does not reduce simply because someone has retired. However, in the case of low income or ill health, individuals may claim a council tax reduction.
What am I entitled to if I quit my job?
If you quit your job you are entitled to be paid in full up to the last day of your employment by your employer, as well as any benefits that you were entitled to but did not claim such as holiday pay. In case of state benefits from the DWP, you will be entitled to New Style Jobseeker’s Allowance, New Style Employment and Support Allowance, Universal Credit and Pension Credit.