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How to Release Your Pension - Details on Pension Release. Should I Use a Pension Release? Why Release a Pension

Pension Release

All non-state pension schemes provide the option of taking a tax free lump sum up to a maximum of 25 percent of the fund upon retirement.

However pension holders who are aged 55 or over and who have a sufficient amount in their funds may under some circumstances be able to release this capital whilst still working. This is known as pension release, or pension unlocking. These funds, which can be 25 percent of the existing fund or any part thereof, can be accessed either in the form of a tax free lump sum or of a regular taxable income whether direct from the pension fund or through purchasing an annuity.

Releasing capital before retirement age can be an attractive option for anybody who needs substantial funding for any reason, whether it is for home improvements, a luxury family holiday, a new car or even just to settle debts. There are many advantages to pension release at a time when the claimant is younger and perhaps more inclined or more able to travel, or to invest in improving the home. It is an age when one may have children who are going on to further studies and who many need a helping hand.

Taking pension release does not in any way debar the investor from making new contributions into the pension fund. These will attract tax relief and will be added to the funds that are in the existing pension. One may continue to work as normal.

As with most financial decisions opting for pension release does potentially incur certain financial risks, and it is always advisable to seek independent financial advice before proceeding. However one must at the same time take care to avoid over zealous encouragement from sources that may have an interest in urging you to pursue this course without caring too much for your own long-term financial security.

Ultimately any sensible investor will be aware that the obvious benefits of an immediate cash release will need to be weighed up against the disbenefits of having less funds remaining in the pot for when the pension (or an annuity if it is to be converted) matures. It is a question of determining priorities, and of making a personal decision as to whether it is more important to have cash now, or to be in a position to enjoy the maximum benefits of a full pension when you come to retire. If you are considering pension release, get in contact with one of the above pension release companies who may be able to assist you further with regards to releasing your pension.

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