Early Pension Release is not Pension Liberation

Early Pension Release, also known as Pension Unlocking or Pension Lump Sum Early, is when you legally take some of the money you have in your pension early; it’s as simple as that.

The rules allow you to access your pension once you reach age 55; everyone is allowed to do this. The problem may arise that the company you have your pension with won’t allow you to get hold of your pension money before your selected retirement date, which could be 60 or 65.

To get around this problem you simply need to transfer your pension into a scheme that will allow you to take it from the age of 55.

You are allowed to do this under UK legislation and can usually take out up to 25% of the value of your pension fund as a tax free cash lump sum. The rest of your pension fund must be used to provide you with an income; for most people that means buying an annuity, which simply means you give that money to an insurance company and they will pay you an income for the rest of your life.

The main thing you have to be careful of if you are thinking about taking some cash out of your pension early, is whether it is suitable for you to do so. This is because if you are taking money out of your pension early, it isn’t going to be there when you retire – in other words you can’t have your cake and eat it.

Also, there are likely to be costs involved with taking your pension early so you need to seek professional advice and make sure you know all the costs and charges before you go ahead with anything. In other words make sure you understand the consequences of your actions before making any final decisions.

There are some companies that say they can get you access to your pension before the age of 55 or even release more than 25% as a cash lump sum. These are likely to be scams trying to con you out of your money so you must be vigilant and not get sucked in by companies that might use the same language as the legitimate firms. They could talk about Early Pension Release when in reality, what they are doing is a con and can land you with a significant tax bill.

To protect yourself only deal with companies based in the UK. Make sure they are registered with The Financial Conduct Authority by looking them up on their website and if necessary, get a second opinion.