What You Need To Know When Cashing In Pension Early

Taking advantage of your pension savings is an option but one of last resort. This is what both your pension fund and pension advisers are likely to say. Denting your pension savings pool at an early stage could prove rather costly over the long haul. The lower your total pension savings, the lower the interest accruals on the rest of your pension pool and the lower your pension once you retire. You can also lose any benefits as offered by your pension, such as a terminal bonus, or yet a poor-health bonus.

This is all the more true of people willing to cash in pension early, i.e. before reaching 55 years when you are legally entitled to cashing in on your pension under the UK legislation. Yet if you feel you still feel you want to do it, consider a couple of important facts.


Not quite a pension release


As mentioned above, legitimate management begins only when you turn 55. This means that all pension cash-in promos for "early call" individuals like you would actually be an offer to restructure your pension. Your pension pool would either be redirected to another pension fund or would remain with your existing fund but under renegotiated terms, total present value and interest rate included. In this way, your pension consultant may agree on a smaller pension savings value, thereby releasing a sum for your needs.



Charges might be high


While you will still be promised a tax-free lump sum, you should be alerted of the hefty charges which generally accompany the pension restructuring exercise. As reports have indicated, commissions can reach tens of per cent of the value of the investments made. In any case, make sure you have asked about all the costs related to the pension release transaction.


Pension Cash Now claims it can release money in a way which will have no impact on your pension savings. Check if this is true in your particular as well. Do not forget to inquire about the interest, benefits, and the scheme to be used.


Pension Funds Released gives you an opportunity to either release pension and cash in up to 80% of your pension or keep your pension and get 40% of its value cash. See how both options work and if they work for you.


With Control Your Pension, you get access to an information pool which will give you enough details to make a really informed decision. Click on the Articles section and begin reading now.


The information on this page is designed to help you understand more and make more informed choices. We do not receive any commissions, instead we are funded from companies that we advertise on our website.

You may also want to read about: Annuities