Significant Facts About Pension Release to Consider

By Mick Stanley


If you are thinking of ways by which you can harness part of your pension funds way before your retirement age, then you are looking at pension release as an option. This financial decision is applicable to both your personal pension and old Company pension. To qualify for pension release, you have to be over 55 years old. You should seriously look at pension release if you need additional cash or if you are looking at your retirement options or choices.

There are risk implications when you opt for pension release or pension unlocking. As such, a UK pension holder must have at least 15,000 in sum total in his or her pension fund when considering taking a portion of it before reaching 60 or 65 years old. Pension release effectively reduces the amount that you can receive at retirement age and you have to seek financial advice before making your final decision.

You don't have to unlock or release the maximum amount of your fund when you opt for pension release. This means that you can take out less than this amount or just take out the income component of your old Company pension fund or personal pension fund. In effect, you are actually leaving a higher amount invested in your fund and have this balance available when you finally retire.

You can still apply for subsequent pension release for the remaining balance of the portion of your old Company pension fund or personal fund equivalent to 25 percent. If your future situation requires you to opt for this option, then you can go for another pension release for the remaining balance. Aside from this option, you can opt to leave the remaining balance intact to earn income and form part of the cash sum you will receive upon retirement.

So, how much are you entitled to get when you take out cash from your old Company pension or personal pension through pension release? Whilst you can withdraw a maximum 25 percent of the sum total of your pension, the exact amount that you can get will be determined by the option or scheme that you choose. The schemes for pension release include withdrawal of lump sum, recurring income or a combination of these first two schemes.

Looking at these important facts about pension release, a UK pension holder can easily appreciate and understand the implication of such decision on his or her financial position which is critical in making a more informed choice. This indicates the need to weigh the pros and cons of each of the schemes under pension release. As such, a UK pension holder is advised to seek the recommendation of a professional finance specialist.




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