Why pension release

The facts you need when it comes to withdrawing money early from your pot.

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Pension release simply means withdrawing money from your retirement savings. As long as you are 55 or over and have an eligible scheme then current government rules mean you can withdraw as much money as you like from your pension pot. The first 25% withdrawn is usually tax free. After that, any withdrawals are subject to income tax at your marginal rate.

Pension release is a big decision, though, as this is money you have saved up for when you say goodbye to the 9 to 5. It isn’t right for everyone because it could leave you with less to live on in retirement. That’s why it makes sense to talk with an independent and regulated adviser, such as Portafina, first.

What schemes are eligible for pension release?

  • Private pensions
  • Company pensions
  • Old company and personal pensions
  • The State Pension
  • Unfunded pension schemes
What schemes are eligible for pension release?
Tax treatment depends on your circumstances and is subject to change.
Is pension release right for you?

Is pension release right for you?

Current rules mean you have more freedom and flexibility than ever before when it comes to how and when you access your pension savings. And in our experience, the top three reasons for Portafina clients taking money early from their pension are1:

If possible, it makes sense to keep your pension savings invested until you retire. That way you should have more financial freedom for the next chapter in your life. Everyone’s circumstances are different, though. That’s why you should have a chat with a financial adviser before you make any decisions.

Pension release with a financial adviser

An independent and regulated financial adviser, such as Portafina, will analyse your pensions, your circumstances and your objectives before recommending whether or not pension release is right for you. As well as a specialist doing all the hard work for you, using a financial adviser means you are additionally protected against the advice not being in your best interests.

Pension release with a financial adviser

How pension release works in 3 easy steps

With our no obligation pension check discover how much you could release from your pension and if it’s the right thing for you to do.

Our initial investigation into your pension is free and in many cases we can continue to provide full advice with no obligation. If you decide to make a change to your pension, including releasing money from it, we will take care of everything for you. We’ll also let you know in writing what the fee would be. Or, you can choose to walk away with nothing to pay.

Pension release and final salary schemes

A final salary scheme is usually a company pension that promises to pay you a guaranteed income for life from a set age. Unlike a standard defined contribution pension, the income you receive is not dependent on how the investments perform. These types of pensions are increasingly rare and extremely valuable.

In many cases you can release money early from these types of schemes; although, if it is worth £30,000 or more, you have to seek financial advice before you can do so. And from a regulatory point of view, the default position is to leave these types of pension as they are. This is because by releasing money early, you would be giving up that valuable guaranteed income for life. As we’ve said before, everyone’s circumstances are different, though.

What are unfunded pension schemes?

If you work for the NHS, the military, the emergency services, or the civil service, there is a good chance your pension is unfunded. And if you have an unfunded scheme, you cannot take money from it early. The good news is, like final salary schemes, these types of pension promise to pay you a guaranteed income for life from a set age. This is an extremely valuable pension benefit to have.
What are unfunded pension schemes?
1Portafina statistics: primary reasons for clients taking tax-free cash: up to 4th Nov 2020