Pension Release FAQ

Q. What are the criteria for applying for Pension Release?

A. You must be aged between 55 and 64. You must have a UK Pension (not state pension). You cannot be receiving benefits from the Pension already. It must not be your current employer’s occupational pension. You have a need for a cash lump sum.

Q. How much will I receive?

A. The amount you will receive is dependent on the size of fund in your Pension. In most cases 25% of the transfer value can be released as a Tax Free sum.

Q. What Tax Do I have to Pay on the cash sum from Pension Release

A. You do not have to pay any Tax on the Tax Free lump sum released. If you take the extra drawdown payment in the first year, depending on your circumstances you should note that HM Revenue & Customs views any sum you receive as part of your Income, this means that you might have to pay Income Tax on the sum. HM Revenue & Customs include Pension payments as part of your income when working out how much Tax is owed. This is standard procedure.

Q. Do I still have to pay my month premiums into the Pension Policy?

A. No, you will no longer be able to pay into the policy. Pension Release is a way of being able to take your money now as either a lump sum, income or a combination of the two.

Q. Am I able to continue working if I wish to take early benefits?

A. In most circumstances you are still able to continue working however this should be treated on a case by case basis. There are many people who are over retirement age, working and drawing State Pensions.

It should be noted that a UK pension is there to provide an income during retirement so Pension Release is only suitable for certain people and under certain circumstances. For these reasons Release should not be seen as an easy alternative to raising cash quickly.

If you think that Pension Release is a viable option for you then you can get started by filling in the form on the right.

How Much Can I Release ?

The usual amount that you are able to release from a pension is 25% Tax Free. You can release additional funds, but the additional money may be subject to Tax. Income may be left for a later date or may be used immediately and this will be subject to taxation as earned income.

You are not required to release the absolute maximum amount. In fact, if you do not need to, then you should not do it.

If you decide to release the maximum amount, the remainder of the pension fund must be used to provide you with an going income in the future. You are able to take the income immediately if you so wish or you can defer releasing it by leaving it in the fund to take it at another time.

You should be aware that deferring taking the income was not an option before April 2006; in fact there are many pension contracts that still exist where this is still not allowed. If your current pension contract does not allow this, there are still ways that it can be achieved.

The advantage of deferring taking the income immediately, is that the money remains invested. This could mean that your pension is bigger when you decide to take it; however, if the investments don’t perform as expected, you may actually end up with less.

If you do decide to release cash from your pension immediately via Pension Unlocking, Pension Release or defer it until later on, you will have a choice about how the income is paid to you.

It can appear a daunting and complicated process; there are many choices and options to consider. For this reason it is important that you make the correct decision regarding your pension fund.

There are both disadvantages and advantages and benefits associated with Pension Release. This FSA approved company will be able to advise you whether pension release is a suitable option for your requirements and circumstances.

For more information and to find out whether pension release is a viable option for you, fill out a get started form above. This leads to a page where you can securely find out about the pension you wish to find out about.

No pushy salesman will call you and there are no obligations to find out about your options.

Are there advantages for releasing less than the maximum amount allowed?

It is possible to take less than the maximum money allowed, even if taking this option is not offered by the current pension fund provider.

For those people that do not need to release the whole amount immediately, this can be very useful. As an example: You may require a specific amount of money, which is less than the maximum allowed.

If you only take what you need straight away, you have the advantage of leaving the money invested in the pension fund. This means the funds are available for you later on, however, the fund value may also go down as well as up.

There is no loss of entitlement to cash balance of what you did not take. The balance may be taken when you finally retire, or sooner if the need arises and you have a further requirement for money.

There are definitely pros and cons taking this option. You need professional unbiased advice to make sure you understand the implications.

Taking Income Only

You are able to take just income without taking out a cash lump sum. There are a few ways in which this is possible.

A popular option is to buy an annuity; this is simply handing over the pension fund to an insurance company. The insurance company then promises to pay you via a regular income for the remainder of your life.

The marketplace for annuities is extremely competitive and you will find that rates vary greatly between companies. By choosing the right company with the best rates, it is possible to substantially increase the income which you will receive. This process is called “exercising the open market” option. It costs nothing to take advantage of this.

There are multiple options and many different ways that an annuity can be paid. Make sure you get the best rates that are available. If you smoke or are in ill health, then make sure that you take advantage of enhanced rates. Smoking and ill health can affect how long you live and as such will get you a bigger income.

Another option is to leave the money invested in your pension and draw money as income directly from it. In this way you do not hand over your money to an insurance company for the annuity. There are risks, it is important that you understand all of the implications.

There can be advantages and disadvantages with all of the available options. It’s important to discuss this with a Pension Release expert who will advise you about your options. It is an important decision and will have an impact on your future income.

If you have the requirement for a cash lump sum now, then fill out the form above to find out if Pension Release is right for you.

Remember, there are no obligations and it will cost you nothing to find out what your best options are.

Click here for a “Get Started” Form