How to Release Money from your Pension

Author: Lolita Brown

If you would like to benefit from your pension now, then you can. Pension Release allows you to get access to your pension to use for whatever reason. Whether this is to pay off a debt or for home inprovements, pension release gives you this opportunity.

In the UK, pension release is a provision that allows you to withdraw money from your pension plan prior to full retirement. If you are over 50 and have a UK pension plan then you could be eligible to receive a tax free cash sum and/or income. You may want to do this if you need some money now but have not retired yet, or you may be thinking about retirement and want to look at your options.

Taking benefits early will reduce the amount of money you will receive in retirement, but is a way of getting your money out when you need it. You can release a total cash sum in your first year of just over 25% of your pension fund and nearly all of this is tax free. Income can be taken immediately or left to a later date and will be taxed as earned income.

You do not have to release the maximum of cash, and is better if you do not need it all, only take out what you need. But if you do take out all the money allowed, the rest of your pension fund must be used to provide an ongoing income. You can take this money immediately or you can defer (as from April 2006) leaving your pension fund to take another time. The advantage of taking less than the maximum cash sum allowed is it will leave more money invested in your pension.

It also works if you take just income without a cash sum and there different ways to do this. You can buy an annuity - hand over your pension fund to an insurance company and they pay you back a regular income for the rest of your life. The annuity market is very competitive and the rates differ between companies. ‘Exercising the open market option’ can make it possible to substantially increase your pension income by purchasing your annuity from the company with the best rates!

Alternatively, instead of buying an annuity, leave your pension fund invested and draw an income directly from it. This option means you do not have to hand over your money to anyone else, but there are disadvantages here too. It is best to get some advice before you decide to release some money from your pension. It is important to make sure you fully understand the implications of any decisions you make. Pension Release Schemes can help you and give you quotes according to your pension scheme.

About Author

Someimes you need access to your pension now and with Personal Pension Release you can do just that. http://www.personal-pension-release.co.uk/

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