Pension release or unlocking means getting the cash tied up in your pension funds before you reach retirements. There are different ways of doing this, some of which are legal while others are not. If you are over 55, you can legally access your savings through a pension scheme. However, what happens if you are under 55 years? In such as case, you can get the money if you have very poor health.
The rules of the pension scheme of your workplace determine the age at which you can start taking funds from your pension scheme. Other factors that determine this include the date chosen when the pension started and personal or stakeholder pensions. In most cases, the age is 60 or 65, but could be lower.
According to the law, you cannot withdraw money from you pension until you are 55. However, not all schemes will allow pension release. Sometimes, your only option may be to transfer to another scheme in order to get your cash. You can find out about the options you have by talking to you employer, trustee or pension administrator.
Warning about Pension Unlocking
Before you decide to take money out early from our pension scheme, you should think careful. This is the case even if you are doing it legally. You are bound to receive ales than you have saved in your pension. Moreover, you may not leave enough funds in the savings to see you through retirement.
The April 2015 rules mean you have more options to accessing your pension funds than was the case in the past. This is why you should know all the options you have.
Pension release is not suitable for everyone. Only a small number of peoples and in special circumstances benefit from it. For instance, if you are in very poor health which has reduced your expected time to leave, pension unlocking will be beneficial.
Is Pension Unlocking Right for You?
If you are over 55, you can access your pension even if you haven’t reached your retirement age. However, before you tap into your pension savings, ask yourself the following:
- Is there a better way through which I can raise the money I need?
- Will I have to pay any ongoing charges?
- How much would I pay an adviser?
- How much fees will I be charged to get my money early?
- Are there any penalties I would pay if I unlock my pension early?
- Are there any benefits I would be giving up, for example death or ill health benefits?
- Do I really need the extra cash now?
- Would the reduced pension income be enough to meet my future living expenses?
- How much retirement income would I get now and how much will be left for later?
Before you decide to unlock your pension, it is important to get advice from a solicitor or financial adviser. These professional have to follow a number of rules and would only recommend a product that is suitable for you. If you decide to go ahead and tap into funds without advice, you will have very little protection in case the end up with the wrong product or get scammed.