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.