Pension Release – Details

Pension Release Details
There are a lot of things to consider before you opt for Pension Release…it should certainly not be seen as a quick-fix solution for money. We have put together a selection of questions and answers below to help you decide whether unlocking the tax free cash in your pension is suitable for you.

What is pension release?

Pension release is also known as pension unlocking, which is used to get earlier access to your pension money and free up to 25% of your pension tax-free before you reach retirement. However, you will need to be over 55 and have a sufficient amount of money pot invested in your pension before considering pension release.

Complete this form for a free, no obligation telephone consultation.

Is pension release a loan?

Pension release is NOT a LOAN as per se, the money pot will have already been invested in your pension fund by you, your employer if it is a company pension or someone else on your behalf over the years. You are able to access cash from your pension fund earlier than your planned retirement age through pension release. Money can be unlocked from both your company pensions and private pensions. This can be a tax-free lump sum.

Why should I release my pension?

If you have an urgent need for cash and if your personal situations allow you to unlock some money from your pension, you can use the money however you want. Some people will use it to pay-off debts where there is no other option to raise capital or to fund university or tuition fees for their children.

Enquire now for a free, no obligation telephone consultation.

A word of caution

A pension is a long-term investment plan for your retirement so think very carefully about cashing in your pension beforehand. The long-term benefits of a pension is always hard to be replaced, thereby for some people, they should consider other finance options first and use pension release as a last resort.

Only in exceptional cases where you have a strong need for cash and no other options, should you even consider pension release. For instance, it may not be the best option to obtain a loan for someone approaching his retirement if the interest is high.

How long does it take to release my pension?

It is hard to predict an accurate timescale for pension release which depends on your pension company and your own circumstances, so you should not rely on pension release as a ‘quick fix’ for your rainy day.

Complete this form for a free, no obligation telephone consultation.

You should always have an alternative financial plan for yourself after retirement before unlocking your pension. Once you have touched the money in your pension scheme, it can have a long-lasting impact on your later income and lifestyle for the rest of your life.

What happens to my pension once it is released?

You can still contribute to a pension from which you will have taken tax-free cash. The new contributions you make will still be entitled to pension tax relief. You should go and see a pension specialist about re-contributing to this pension. Moreover, you should ask advice from an independent advisor to help you make an informed decision should you ever consider unlocking your pension.

Complete this form for a free, no obligation telephone consultation.

Is pension release for everyone?

You must be at least 55 years old to unlock your pension. You must have either a private pension or company pension from/ to which you are not drawing or currently contributing.

Do I have to retire for a pension release?

Please note that it is not possible to arrange for your pension funds to be released from your current employer’s scheme which you are eligible to make contributions (please go to see the rules for pension release). As a result, most people tend to think that you will have to retire once they have unlocked their pensions.

In fact, there is no need to retire at all and they can continue to work. However, releasing a pension for some regular payments before your retirement does provide you with a smooth transition into retirement. You can work less hours and still be paid more money as some income will come from your pension release.

Enquire now for a free, no obligation telephone consultation.

How much can I release?

To date, the rules state that you can only release a cash lump sum of up to 25% of the value of your pension scheme, which is tax free and is known as a ‘Pension Commencement Lump Sum’ (PCLS).
What you need to be aware of is the fact that you do not lose your entitlement to the balance of what you didn’t take. As you have been contributing to your pension plan for years, you should not release the maximum amount of cash unless it is critical for you to have the cash in hand. The more money you want to release from your pension now will make you receive less money at retirement.

It is also possible to draw a regular income from your pension. This will be subject to income tax at the appropriate rate.

What are the advantages and disadvantages of pension release?


– You can unlock up to 25% of your pension and receive the cash Tax Free, with no interest payments or additional security


– Releasing a pension to get your well needed cash comes at an opportunity cost of reducing the amount of income you would otherwise get at retirement

– You will reduce what you can otherwise get at retirement

How to release cash from a pension?

Pension release can be complicated and difficult to understand. Your pension fund arrangements are only unique and special to you. It is nearly impossible to generalise a one-size-fit all system in handling the pension release process.

To begin with, you can always contact your pension provider to gather all of the information needed for you to gain a clear and concise overview of your pension release options. In some cases, you will have to arrange a pension transfer in order to release your pension benefits early.

There are a number of options available for you to decide given your personal situation and this is why you should have professional advice from accredited financial advisors.

Complete this form for a free, no obligation telephone consultation.

If you current pension scheme does not allow you to unlock your pension, you can transfer this pension plan into another pension plan before proceeding.

Rules for pension release

– You can only release 25% of your pension tax free and additional income taken will be subject to the income tax.

e.g. you are getting £10,000 a year from your pension release, the 25% of £10,000 will be tax free which can be understood as your tax free allowance and the other 75% will be taxed according to the income tax rate.

– You are still entitled to release 25% of the total pensions tax free if you have more than one pension.

e.g. Sally has invested her money into 3 different pensions and she wants to release cash from them. Although she will be getting £1000.00 from each pension per month, the amount of taxable income is calculated as £1000.00*3*75%* any given income tax rate.

– You can only release cash from a pension that you are not currently benefitting from.

e.g. Joe has a private pension from which he has been getting £1,500 per month for the last 2 years, he will not be able to release cash from this pension plan anymore.

– You can only release cash from a pension that you are not currently paying into.

e.g. you have an old company pension into which you have not paid for years, it is still available for pension release.

Complete the form and we’ll send you an enquiry form, once you have sent this back we can let you know whether you qualify and how much you can release.

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