Pension Unlocking

Early Pension Release simply means the act of taking one’s pension benefits early, that is, before the retirement age. It is also referred to as pension unlocking. The legal age for this in the United Kingdom is 55 years. There are however a number of firms that tell people that they are capable of unlocking people’s pension before the age of 55.

These firms have their internal limits regarding the age at which one would be allowed to unlock their pension. These age limits are characteristic to these firms alone. The act of taking one’s pension before the age of 55 is however illegal according to the law.

It is however possible for that to happen, only that there are a number of risks involved. One risk is that you will have to part with a lot of money for this to be done for you. Another risk comes in the event of an encounter with a firm that is only interested in swindling people of their money. There are lots of scams in the United Kingdom in this regard.

Considerations You Should Make Before Unlocking Your Pension Early

The following considerations should be made before getting to a decision on taking your pension early:

• You should consider the difference in the income you would get on taking your pension early and the income you would get in the event that you leave your pension until retirement.

• You need to be sure that you really need the extra bit of cash from your pension, and need it for a good reason.

• You should consider all other options for raising the amount of money that you need before getting the early pension.

• You need to find out if you will be giving up certain benefits if you take your pension early.

• You should as well find out the amount of money that you have to pay in order to get the early pension.

• In the event that you need an advisor, it would cost you for sure. You need to take this extra cost into consideration.

• You should as well look into the on-going charges that might be there.

• You should find out if there are penalties you would have to pay in the event of unlocking your pension early. This is one of the fundamental factors that one should not forget when dealing with pension issues.

Benefits of Early Pension Release

There are a number of benefits that a person can get from releasing his/ her pension early. Two are however key, of all these benefits:

1. Planning One’s Will Early

A number of people take their pensions early due to ill health and the uncertainty of living beyond one’s retirement age. This helps them plan their wills early, possibly with all their value at hand. It also saves a person’s kin the hassle of following up on his/ her pension in the event that this person truly passes on as he/ she expects.

2. Investing to Grow One’s Portfolio More

Acquiring extra cash, without a doubt, puts you in a very strong financial position. One would easily invest in the ideas he/ she had due to the availability of capital to get started.

Acquiring your pension early makes it easy for you to afford the fees charged by financial or pension investment advisers. This makes it easy for you to invest in viable ideas as advised by professionals or experts. Some investment ideas that you might consider once you take your pension early are:

• Investing in equities

• Investing in corporate bonds

• Investing in shares and stocks

There are lots of other investment ideas that, when put into action, would put you in a stronger financial position through the profits that they would raise in the future. However, it is important to choose the right idea and implement it to get better profits.

It would certainly be of benefit to you if you unlocked your pension early, but only if you do that with the right intentions. If you go for an early pension release, then you should ensure that you invest wisely in order not to go into your old age with no money for a proper upkeep for yourself and the people you care about. In many ways, a pension is the ultimate road towards a better future after retirement.

For more information on Pensions and Investments contact Pension Performance on 0800 779 7458.

Pension Release

The term pension release or pension unlocking refers to taking pension benefits before the age of 55. This could be possible in rare cases such as terminal illness. But, promises of early pension release are false and may result in serious tax consequences.

Does taking a pension release early affect your income?

It might not be in your best interests to transfer your pension from a defined benefit scheme. Hence you need to think carefully. By taking your retirement early, the amount will be less than that you could have gotten if wait till the retirement period. In fact, you will have less life when you reach the age of 55.

You need to make a wise decision if pension release is the best for you. You have to look for the right solutions to the following questions before going for the pension release:

What is the amount you will get when you go for the pension as compared to the amount you will get after your retirement?

Do you really need to raise extra amount now?

What is the cost of paying an adviser?

Is there any other way which you can raise the money you require apart from the pension?

By answering the questions above, you will understand the basis of your advice which you get.

How Pension release or unlocking could be a fraud

Some of the pension release schemes can be a fraud when you are misled on the consequences of being part of such arrangements. This will result in tax penalties and charges which are more than half the value of the money which you would have received as your pension savings. Unfortunately, the people who are targeted are usually not informed on the potential tax implications.

How fraudsters target pension transfer offers

Most of the companies in the UK are targeting people who are claiming that they can assist them to get early pension release. The following are some of the things which you need be careful when approach in a similar way:

Unregulated advisers who tells you that they can assist you to access your pension before the retirement age.

When you are approached by unknown company through text

Any reference to overseas investments or creative investments

The risks of early pension release

It sounds very attractive if you get your pension before the age of 55 especially if you urgently need money. However, it is risky. The following are the major risks involved:

You might get poorer during the retirement age

Early pension release enables you to use your retirement once. This will result in much less or low income at the age of 55.

You might be hit unexpectedly with high charges. The pension release charges a fee which ranges from 10 to 30 percent. This is an arrangement fee which is used by the organisers. You might be misled by the consequences of the transfer

Normally, pension release has huge taxes on the income of the individual. Hence, you should be ready to face the consequences of that transfer.

There are significant charges by the customs (HRMC) and HM revenue

When taking cash from your pension, you need to tell the HRMC as well as paying the tax. Failure to inform the HM and HRMC will lead to charging penalties and interests in addition to the tax which you have to pay.

How to get pension release legally

You need to use firms which are registered by the financial conduct authority. This is a financial service regulator which is based in UK. In addition to that, FCA holds a register of all authorized firms who does business in the United Kingdom.

If you want to use your money for your pension to repay your debts, you need to contact a free debt adviser who will enable you to know what you can do. This is normally done by the financial service which is authorized by FCA.

If the authorized adviser is for the pension unlocking scheme, you need to ask them to give you detailed information on the consequences and risks of the pension unlocking. The adviser may be illegal if you are not informed about the risk involved when early pension release is taken.

In conclusion, you need to make a wise decision regarding the pension release scheme. By reading the article above, you can get an idea of how pension release works.

For more information on Pension Investments, contact Pension Performance on 0800 779 7458.