Could Pension Release Revive your Finances?
Posted on November 13th, 2008. Filed under: Finance.In the present UK economic climate a great many people over the age of 50 are experiencing some degree of financial difficulty. Many in this age group may be unaware that they could utilise their pension funds earlier rather than later to alleviate their financial hardship.
An element of tax free cash may be withdrawn now with the remaining funds staying in the fund until the desired retirement date. This form of partial withdrawal is known as Pension Release, which allows a portion or all the Tax Free Cash to be withdrawn from the fund (normally 25% of the total value of the fund) with the rest remaining until you opt to take Income from your pension or reach retirement. This arrangement changes in 2010 when the minimum age to take pension release will be raised to 55
It is possible that you may be unaware of the flexibility of pensions these days. If you withdraw your pension benefits at the age of 50 you are still permitted to work and carry on paying into a pension arrangement. This can be started at a later date when you feel more financially able to do so.
This new fund can be funded by lump sums or regular contributions, both of which qualify for tax relief. You will need to take qualified Independent Advice before making any firm commitment.
Pension Release is a great option for many but you must not lose sight of the fact that. You are essentially taking income today in exchange for forgoing income in the future. You must be fully aware of any hidden costs, and the financial implications of this action in terms of losses as well as the immediate gains.
You should be able to obtain Specialist Pensions Advice free of charge to advise you of your current position and possible options to take.
In many cases your existing pension provider will have the facility for a Pension Release. If this is not possible it will be necessary to transfer your benefits to another arrangement. This is likely to involve some costs and you need to be fully aware of these before confirming. You should push to get the Tax Free cash element deducted before any costs and charges are applied.