One of the big questions that many people that are considering releasing their pension are asking themselves at the moment is: “Can I Take A Tax Free Lump Sum From My Pension?”.
The truth about that is it depends. It depends on your age. (You should probably read this article in full if you are thinking of taking a lump sum from your pension.)
Taking A Tax Free Lump Sum From Your Pension: OVER 55.
The way that it is supposed to work is that an individual is supposed to take a lump sum from their pension over the age of 55, this is because there is legislation enabling people above the age of 55 to take money from their pension (up to 25% tax free to be precise).
Here is an excerpt from the government website on the subject of the new pension legislation as of 2015:
“Lump sum payment
You can take money direct from your pension pot without having to buy an annuity or put the money into drawdown, and 25% of this sum will be tax free. This is called an ‘crystallized funds pension lump sum’ (UFPLS). You can take one or more UFPLS payments and these can be regular or irregular payments.”
What does the above information mean?
It basically means you can now access your pension pot and take 25% of the money without having to use the rest of the pension money to buy an annuity or put the money into a pension drawdown scheme.
Basically as of the 2015 changes to the pension system, investors now have ever greater freedom so as to what they can do with their money.
It is possible to obtain up to 25% of your pension tax free if you are over 55, by using a pension release scheme this is something that our associates specialize in and can help you achieve, to make constant with them use the online form to the upper right hand side of the page.
Bear In Mind: Taking a tax free lump sum from a pension will mean that you are effectively using up some of your existing pension fund, it’s important to be smart when considering how you use the money because (depending on the situation) there could be more appropriate means of procuring the finance or the financial help that you require to help with your predicament (assuming that is the purpose of the pension release, for debt relief).
Taking A Tax Free Lump Sum From A Pension: UNDER 55
Thats’ not the way it works unfortunately.
The only way you can tax a lump sum from your pension under 55 legally is if you are in poor health.
But there is another option.
The only option available for people who wish to access their pension money under the age of 55 (in most cases) will need to take a loan from their pension, however this will likely incur interest & potentially charges.
If this is an option you would like to discuss as a possibility to find out your options, you can reach us using the “free pension review” contact form to the upper right hand side of the page.
You should think carefully before taking out loans against your pension pot, planning for the future is essential and a personal pension is a major aspect of that, be sure to find out all the facts before making any kind of long term decision and remember “Don’t leave yourself short for retirement”, Always think of the consequences for the future.