Terminally ill people will find it easier to unlock pension savings under new DWP rules announced today

Pensions minister Torsten Bell has announced that the DWP will revise how terminal illness is defined for pension tax purposes, scrapping the existing rigid 12-month medical evidence test in favour of a more flexible standard under which access is permitted where death within a year can reasonably be anticipated. The change addresses a stark anomaly in which terminally ill people found it easier to unlock benefit payments than their own pension savings. A wider package of private pension proposals is expected by spring.

Under current rules, accessing benefits can be easier for the terminally ill than getting their own pension — Bell called the red tape 'wrong'.

Marie Curie's Dr Sam Royston backed the change, warning that a terminal diagnosis causes a 'sudden and significant' drop in household income.

The government says nearly 90% of eligible employees now save into a workplace pension, making the access rules matter to millions of families.