Why pension release
The facts you need when it comes to withdrawing money early from your pot.
We are authorised and regulated by the Financial Conduct Authority
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 The first 25% withdrawn is usually tax free.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?
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:
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.
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.
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.