The Covid-19 crisis: should you access your pension early?

2020 and 2021 are unlikely to be years in which we look back and relish. In order to overcome the virus, we have had to keep a distance from friends and loved ones. Not only did the Covid-19 pandemic take precious lives across the world, it also prevented us from acquiring our daily needs. Our way of life in the UK has been pretty much turned upside down.

We have all tried desperately to live within restrictions which have turned our social functioning upside down and brought our source of income into question. With all of this, some of us have had to search for new ways to financially manage this crisis period. Safely taking money from your pension maybe an answer but it perhaps should not be the first solution in most cases.

Keeping up with the news and changing laws

The UK government has provided various ways in which to support businesses through these difficult times (such as grants and furlough schemes) but there are still fears these will not be enough to allow businesses and employees to keep their heads above water.

As much as the lockdown rules are continuously changing, the government is constantly looking for new ways to support the man in the street. It is therefore essential to keep an eye on the news to keep up with what you can claim for. The government website is also useful (to see more click here)

Financial support amid the crisis

Many people will come out of the pandemic with debt. We start panicking as debt mounts. Consequently, some people may see loan companies as a way out. Sadly, this may only lead to further debt as individuals find themselves trying to keep up with interest payments on top of the debts they started with. If you are lucky you may have savings accounts, investments or rainy-day money which can see you through this crisis.

Review your savings and options

If there is any good that comes out of the pandemic it will be the fact that individuals will be more in tune with the money they have. In the slipstream of the pandemic, we are more likely to see people finally getting around to finding out what assets they have at their fingertips and how they can use these in the best possible way. Unfortunately, this will often be searching out of necessity, but it is likely to bring to notice hidden areas where people can access money they did not know existed.

Anyone trying to chart the great sea of financial affairs will need a sturdy compass. And in the arena of finance, your robust navigator comes in the shape of a regulated financial adviser. He or she will be able to take you through how best to use your assets in the current climate. They will also be aware of how that may affect your financial standing in the future.

Pensions and financial support

This is particularly true in the world of pensions. Now, thanks to the act brought in by the government in 2015, individuals are able to access money from their pensions as and when they choose (this is dependent on what pension schemes you may have) from the age of 55. In other words, you can look a little further than your everyday savings accounts to help you through a financial crisis.

The pension freedoms allow you to take as much money from your pension as you wish. You can take this in lump sums, as a regular income or just as a one-off payment. The first 25% of your total pension investment will be tax free but be careful that any money you do access during any one year does not affect your income tax status. This is where the advice from your navigator is most needed.

The need for professional advice

The idea of just taking money from your pension pot can be very seductive – but you need to keep at the front of your mind how the subsequent reduction in your pension fund may affect the assets you will have available in retirement.

Statistics show that on average across the UK, people are £30,991 better off1 when they take financial advice.

When the government brought in pension freedoms six years ago it was aware of this important point and so it also made guidance available to those individuals who wanted to look further into how they could maximise their pension savings both before and in retirement.

Pension Wise and The Pension Advisory Service are both free websites which offer excellent guidance as to what options you have. However, it ought to be noted that this is only guidance. These sites cannot offer direct advice in terms of your needs, aspirations and individual pension schemes. For this, you need the support of a regulated financial adviser.

A walk through the pension maze

Here at Portafina we can walk you through the pension maze. We are regulated by the Financial Conduct Authority (FCA) so you can be sure that any advice administered is monitored by a higher body. Hence, we follow strict ethical and procedural guidelines to ensure everything is in our client’s best interests. Not only that but you will receive protection from the Financial Ombudsman Service. This is even more security to accompany the advice you are given.

“We also offer a no-obligation pension check.  Our initial investigation into your pension is free and in many cases we can continue to provide full financial advice with no obligation should you need it.”


If you are 55 or over, a review of your pot can put your mind at rest for the future. It could possibly open new doors and possibly free up cash you did not know was available. If you are approaching your retirement this is the perfect time to look again at the monies you have been saving throughout your working life.

Accessing money from your pension is not right for everyone – your pension scheme may not allow access or taking savings from your pot may place your retirement funds at risk. But the good news is you may find you can access money to help you with any debts the crisis may have thrown at you.


Thinking about your pension options?

Regulated and authorised by the FCA, we can help you to make the best possible decisions when it comes to your pensions.

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.