Are you in need of money but not sure where to get it? If you are over the age of 55, you can actually access the money from your pension scheme legally.
The usual age which most people retire is normally set by the workplace you are in. Generally, it is often between the ages 60 and 65 but some occasions this may differ (some people retire earlier). Most of the time, people start using their pension pot around this time unaware that it is possible to do so earlier.
Legally, when you hit the age of 55, you can start withdrawing money from your pension pot. This is called pension release or pension unlocking. It is basically accessing your money before the age of retirement.
Since 2006, people over the age of 55 were allowed to take up to 25% from their pension pot free of tax. In April 2015, a new pension legislation called money purchase scheme was introduced that allows you to take as much as money as you want from your pension pot.
Keep in mind that even if you are allowed to take as much money as you want from your pension pot, anything beyond the first 25% will add to your annual income and might incur rates of 20% to 45%. So you have to think hard and clearly if you wanted to withdraw everything.
The most logical solution you can do to avoid incurring higher tax rates is to withdraw smaller amounts over the years.
The 25% tax-free pension money from your pot can be withdrawn as a lump sum or you can also opt to withdraw it over a period of time. It will definitely depend on you to decide which one is more convenient.
If you will not get all the money from your pension pot, there are a couple of things that you can do with the remaining money. Your pension pot can be invested to grow further or you can start using it as an income.
You might wonder why people are doing pension release. Well for starters, one of the most common reason that people are accessing their pensions earlier is that they are paying a credit card debt, car loans, and mortgage. Some use it for home repairs and home improvement, while others accessed the pension pot to pay for a wedding and other life events amongst other things.
Pension release is a convenient way to access your pension pot but you have to consider a lot of things before finally deciding if you should. Talking to a pension advice specialist or a pension expert can shed light on what are the best options for you for the purpose you require.
For people who are under the age of 55 but wish to access their pension pot, you can still do so under some circumstances. If you are in poor health, an early pension release can be granted and you will be able to access your pension money right away.
But for those who are in good health but still wish to access your pension pot, it is possible to get a loan from your pension but this will most likely incur higher charges.
Taking money from your pension pot might result in a smaller income for your future but for a lot of people, it makes sense to be able to use the money immediately. If you need assistance or help in deciding, or would want to know more about pensions release, contact your financial advisor now and ask for a free pension review.