Many people out there are asking themselves the question: “Is pension release right for me?”
Usually people that are asking themselves this question have one or more of the following things in their current situation:
1/ The would like to release some cash from their pension, they have a use for the money be it debt repayment, home improvement, mortgage repayment or an occasion related purchase such as a wedding or a holiday.
2/ The individual has money locked into a private pension, and significant money has accrued over time.
3/ The person is usually at least above the age of 45 (however sometimes people are younger) usually much older (over 55).
Is It Right For Me?
First Of All: “Don’t Leave Yourself Short In Retirement”
The thing to remember with pension release is that when you release your pension, you can release up to 25% of the total pension pot completely tax free, this means that if you have a pension of £100,000 you can release around £25,000 of this tax free.
If you have an immediate need to release 25% of your pension, and this is better for you to access this now than for it to be left in its current pension scheme then it would be something for you to consider, however there are other factors you should take into account when thinking of releasing your pension money.
1/ Is the purpose you wish to release your pension a good enough reason for you to go ahead with the pension transfer? Is there another way you could procure the finance that would enable you to keep your pension intact? Would that be preferable? It’s wise to look at the situation from all angles before opening up your pension pot.
2/ Are the re-investments being offered to you safe? Usually with a pension release the rest of your pension is optionally re-invested into a new pension scheme in order to grow the existing leftover pension money over time, have the company that has presented you with this as an offer discussed with you the risks and potential benefits with such a pension switch? Have you read the small print?
3/ How quick will you receive your money as a result of releasing your pension? will this time-frame be fast enough for the purpose of which you need your money to be available for? Are there fees or charges incurred as a result of releasing your pension?
It’s important to do your homework on any re-investments you might make as a result of releasing your pension, many of these investments can go well for people, and people have funds that can and have grown as a result of re-investments of pensions, but there have also been people whom have suffered losses, so it is important to do your research to ensure you are comfortable.
Pension release can be a convenient way for people to access their pension money and this can be a very positive thing, you need to make sure however you have the full explanation of any optional investments you might be offered during the process of release.