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Releasing Pension Cash Choices

A Guide to Releasing Pension Cash Choices

There are many instances when one may wish to release pension funds. A medical condition may dictate that more liquidity is required or perhaps a husband and wife hope to purchase a new property. These are two of the reasons why proper pension release advice is critical in making the correct decisions at the appropriate times. So, let us examine some pension scheme rules as well as clarify how to release pension funds when the time is right.

How to Unlock My Pension: Primary Considerations

It should first be noted that you must normally be more than 55 years old in order to unlock your pension. However, there are instances when those who are quite ill may be able to access these funds earlier. It should also be mentioned that such an early release before the pension has matured may not be enough to get you through the remainder of your retirement. Be careful when choosing this option. Some other questions that are worthwhile addressing are:

  • Will you be sacrificing ill-health or death benefits?
  • Are any penalties associated with an early release?
  • What additional charges will need to be paid (such as a third-party adviser)?
This guide to pension release plans would be remiss should these variables not be mentioned.

Important Pension Scheme Rules

First of all, the total of all of the funds must not exceed £30,000 pounds. Note that this does not include any contributions from your state pension. When you meet these requirements, you may be able to withdraw your pension in a way known as a “trivial commutation” or a “trivial lump sum”. There is another option known as a “small pot”. This is associated with the liquidation of funds assuming that they are less than £10,000 pounds. In the case of the small pot, you will not lose any other pension benefits that may exist alongside the funds. In either of these cases, a grave health condition can allow you to enjoy this money before you reach the age of 55 (assuming an early retirement).

Tax Concerns

As long as benefits are not included in the payment, you will be provided with the possibility to take no more than 25 per cent of the pension in the form of a tax-free lump sum. However, the remaining 75 per cent is considered taxable income. This will depend upon the year in which the funds are withdrawn.

Third-Party Dangers

This guide to pension release options also needs to mention that you should be wary in regards to third-party offers. Many companies are rather dubious in regards to their terms and conditions. In fact, some are not authorised by the FCA. This can present a very real danger. They will often charge extremely high fees and they may require you to “invest” a portion of the money into risky schemes such as overseas property or unregulated markets. These should be avoided at all costs. Not only can you lose a sizable amount of your pension, but the FCA can do little in terms of remuneration. This is relevant pension release advice that should be taken very seriously.

Of course, you can also type in a search term such as “how to unlock my pension” and view the results. However, we at Silver Choices are more than happy to provide you with further information and point you in the right direction. You have earned your pension and such extra funds can be a great way to enjoy the rest of your life.

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