Take Pension Release Information

Pensions in the UK are considered vital for individuals to save until retirement according to the Government and they advise everyone to have at least one pension plan to ensure that they are provided with suitable income upon their retirement.

Take pension release: About

It is estimated that there is over £27 billion in shortfall in today’s market between what people should be saving in their pensions and what they are actually saving.  This has resulted in the average income of a UK adult retiring in 2008 to be £18,663 received from their pension while the average income for a working adult at the same time is roughly £5,000 more than that.

Take pension release: Government Involvement

The Government have attempted to combat this in many forms and have recently began a new push to get people to save and have encouraged individuals to open up their own pension account either with their employer or to set up a private pension.

Take pension release: Circumstances

A pension is traditionally taken upon retirement, however circumstances do exist that allow you take pension release early from your pension scheme and thus receive the benefits before you actually retire. Whether it is right for you to take pension release or not should be discussed with a qualified financial adviser but below is a brief explanation of what it could mean for you.

Take Pension Release: How to

To take pension release you will be enabled to take benefits from your pension before your expected retirement date which is usually set at 65.

Take pension release: Things to consider

These benefits may be taken as a 25% tax free cash lump sum or used to provide an income, or both. But once you take pension release you will be required to reinvest the residual amount into a new pension scheme or an insurance company (should you take an annuity). Under certain circumstances, you may be able to take triviality but this has slightly different rules.

It should be noted however that you cannot take pension release from a State Pension, a pension scheme you already take full benefits from (known as crystallisation) or from some final salary schemes who may not allow members to release benefits while they are still active members. It is therefore worth enquiring with your scheme whether they will allow you to take pension release or not.

Take pension release: Limits

A further limit applying to take pension release is that benefits cannot be taken before you reach the age of 55 (but can be taken at any point from then on) so it is important to ensure that you are within the appropriate age range.

However, if your pension fund is not restricted by any of these limits then you should be ok to take pension release assuming it is fitting for your circumstances.

Take pension release: Summary

Pensions are after all designed to meet your financial requirements at retirement and the Financial Services Authority (FSA) suggest that you should think carefully before deciding to take pension release or not as it could reduce your income upon retirement and is therefore thought to be suitable for a limited number of people and circumstances.

If you still do want to take pension release however, then you should contact an appropriately regulated IFA to seek advice on where to go from here.