If you have not heard pension release before, then the idea of cashing in your pension early may well sound like a hasty and perhaps misguided idea. The financial services authority regulates this area very carefully and it is true that in the majority of cases that you will receive substantially less if you decide to cash in your pension before you reach retirement.
If you’re considering a pension release then the first thing you should do is assess what your immediate monetary needs are. You need to ask yourself the question, do I really need the money now? It is easy to look at the many thousands of pounds locked up in a pension scheme with greedy eyes and is only human nature to want that money immediately. You really need to take a step back and carefully consider this decision. Is your decision to take a pension release water from a real requirement or do you require money which could easily be sourced from a different method.
It is important that you take professional and unbiased advice when considering such an important decision. If you are looking to cash in your pension, then you will need to know what the potential losses are of taking these funds early. It is possible to unlock funds from your pension. If you have an occupational pension or company pension and if you are aged between 55 and 62. As an example, you are able to take 25% of your pension fund as a tax-free lump sum. This is known as PCLS or Pension Commencement Lump Sum. The remainder of your pension must be left in place and should be used to provide an income for when you reach retirement.
The amount of income that is left over after taking pension release is completely dependent on several different factors. Factors such as the type of pension scheme that your cashing the money from and whether it is an occupational pension or a personal pension. A professional pension release consultant will be to give you completely unbiased advice on what this will be.
Once you have decided that pension release may be a prudent thing to do, you will need to follow the correct process, and this again is best handled by a pension release professional who is experienced and accredited by the FSA.
Below are some of the common reasons why people decide on pension release as a way of raising money quickly.
Helping children – this is probably one of the most common reasons why people want to raise money quickly. With today’s economic climate it is harder than ever to get onto the property ladder and many people wish to help their children when they are taking their first steps into property.
Paying off existing debt – it can sometimes be a wise decision to pay off debt, such as credit cards immediately. With the exorbitant interest that these debts can bring, it may be better to pay these debts off immediately, rather than paying the massive interest over time.
Paying off a mortgage – with many endowment policies failing to meet the expectations and couples finding themselves in unexpected arrears, paying off a mortgage can often be a prudent and very satisfying thing to do.
There can be many different reasons why a person would require cash quickly and for some pension release seems like an attractive option. You should, however, try to find alternatives for raising money as a pension release will undoubtedly leave you with less money later on.
Without doubt, you should take the advice of a professional consultant and they will be able to give you an unbiased consultation to see whether pension release is the right thing for you to do.
There is vast amount of information on the subject on the FSA website and if you’re looking for a free guide, then check out this Pension Release Consultant