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Pension Release Frequently Asked Questions
As we all know, the purpose of a pension is to provide for us in later life once we’ve retired, and in order to entice people to put money aside for their future, pension schemes come with many benefits.
The downside of this is that they’re also highly restrictive in terms of when and how they’ll allow you to access the money you’ve paid in.
So to help guide you in your path we have collated this list of commonly asked questions that all relate to pension release or cashing in your pension.
Q. What is Pension Release?
Pension release means taking money out of your pension scheme(s) before you retire.
Can I release my pension if under 55?
Yes, this is possible. If you are under 55 and considering releasing your pension, our pension review experts will be able to advise you on whether this is an option for you based on your individual circumstances in accordance with pension legislation. Give us a call or complete our contact form and we can discuss this in further detail.
Q. Is Pension Release legal?
Yes, Pension Release is perfectly legal, but don’t get Pension Release mixed up with Pension Liberation schemes.
Everything we do is legally-compliant. Options will be made available to you dependent on your individual circumstances.
Q. Can I combine pension pots at retirement?
If you’ve built up two or more pension pots during your working life, it may be easier, and you may get a better deal when you retire if you combine them.
Q. How much will this all cost me?
There are no up-front fees for our services.
Q. Can I take early retirement?
It may be possible to take your benefits early from your pension scheme.
How this works will depend on whether your pension is a defined contribution scheme or a defined benefit.
Q. What is flexible retirement?
It may be possible to take your benefits while you are still working.
How this works will depend on the rules of your pension schemes.
Q. What if I fall Ill?
If you cannot work any longer due to sickness, you may be able to take your pension benefits early.
This is generally known as taking an ill-health pension.
Q. What about late retirement?
Most workplace pension schemes set an age at which you’re expected to take your benefits.
However, you don’t have to take your benefits then and you can take a late retirement.
Q. What is the right choice for me?
When thinking about taking your pension benefits, whether you are retiring or not, there may be a number of different options available to you.
Making the right choice will depend on your personal circumstances and you’re the type of pension scheme you are in.
Q. What are annuities?
Annuities can provide you with a guaranteed income payable for either the rest of your life or a fixed number of years.
Q. What are pensions in payment?
Once you are getting your pension, it will normally be paid to you for the rest of your life.
You should receive a payslip from your scheme or provider telling you what you will be paid and how much tax has been deducted.
It is up to your scheme or provider how often they send you a payslip but they must normally send you one once you have had an increase applied to your pension.
Q. What were the previous rules?
Previously, pension savers were allowed to take up to 25% of their funds as a tax-free lump sum.
The rest of the money had to be used to generate an income in retirement: this is most commonly done by buying an annuity, which guarantees a regular income for the rest of the holder’s life.
Q. What were the old rules around small pension funds?
There were also rules that applied to smaller pensions: anyone with total pension pots of up to £30,000 could take the whole amount as a lump sum if they were 60 or over, but only the first 25% was tax-free.
The same applied to up to three separate pensions of no more than £10,000 each.
Q. What are the new pension rules?
As of April 6 2015, savers have been given greater choice. They are still able to take 25% as a tax-free lump sum.
But they are now also able to take the whole amount as a single lump sum, with the first 25% tax-free and the rest taxed at their highest rate of income tax – this can be zero, 20%, 40% or 45%, depending on what other income they receive in the relevant tax year.
Q. What potential pitfalls are there?
You should be aware that pension liberation schemes are illegal.
Talk to your provider about what you want to do and whether they will allow you to do it.
Q. Do you do the work or are you a broker?
We are a lead generation business for a team of highly knowledgeable time-served FCA registered pension review experts.
This way we can guarantee a high level of service.
Q. Can I see the adviser face to face?
Yes. And every client is treated based on their individual needs and requirements. We are not a one-size-fits-all business.
However. A large part of our service can be conducted by a combination of Telephone, Royal Mail and Email.