Terminally ill savers will be able to unlock their pensions early under new DWP rules announced by Burnham government

Pensions minister Torsten Bell has announced that the definition of terminal illness for pension tax purposes is to change, dropping a requirement for medical evidence of less than one year to live in favour of a broader test that death can "reasonably be expected" within 12 months. The reform directly addresses a perverse anomaly under which a dying person could access state benefits more easily than their own private pension savings. Broader private pension proposals are reportedly due by spring.

Marie Curie's Dr Sam Royston welcomed the move, citing the charity's 'dying in poverty' research showing a terminal diagnosis causes sudden income collapse and rising costs.

Under current rules, nearly 90% of eligible employees are enrolled in a workplace pension, meaning the red tape affects millions of future savers.

Bell said: 'When someone is facing a terminal illness, they shouldn't have to go through red tape to get at their own pension savings.'