If you have been looking for ways to fund an important investment or free up some cash for the trip of a lifetime, pension release may be one option you wish to consider.
But before you go ahead with the process, there are some important points to think about – read on for some important questions to ask, as well as five simple steps to help you get started.
Does this mean I will sell my pension?
Pension release doesn’t necessarily mean that you will be selling your pension. In certain circumstances, you can release a portion of your pension funds early – giving you an additional cash boost from your retirement funds.
As a general rule, you can’t access your pension until you have reached the age of retirement set by your fund (usually 60 or 65, depending on your individual circumstances) – but if you are over 55, you may be eligible for pension release. This can allow you to draw on up to 25 per cent of your pension savings without incurring any tax penalties.
Am I a good candidate?
While pension release can be an excellent way to free up some much-needed cash, it isn’t for everyone – and it is important to make sure you weigh up your suitability before you go ahead with the process.
Because pension release can significantly affect the pot of money you will be able to draw on later in your retirement years, you’ll need to make sure that you approach this decision with a plan in place – and don’t be shy about seeking out independent financial advice if you need a second opinion.
How do I get started?
Once you have decided that pension release is for you, there are five quick and easy steps you can take to get going:
1. Assess the funds in your pension. With some firms, pension release can only be carried out on personal or occupational funds with a balance of £80,000 or more. If you aren’t sure how much money is in your pension, the resources at Direct.gov.uk can help you track down the information you need.
2. Speak to your broker. Contacting a broker who is well-versed in pension release should be your next step. At some firms, this telephone consultation is free of charge, and a representative will talk you through the process.
3. Evaluate your options. Because pension release can impact your retirement savings, you will want to make sure that your options work for you and are legally sound. A reputable broker will only offer you choices that have received legal opinion, and you should never feel pressured to make decisions you are uncomfortable with. If you have been offered a loan by your broker, it may be time to look elsewhere for assistance.
4. Make your application. Your broker should be able to pre-fill in most of this application for you, but this is the time to read the fine print and make sure all the details have been accounted for before you proceed.
5. Enjoy your funds. Regardless of why you need the additional funds, pension release can help you unlock your financial freedom and help you to really make the most of your pre-retirement years.