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Information To Be Wary Of When Considering A Pension Release

By Expert Author: Peter Philip

When examining all the pros and cons of financial freedom on retirement, the one thing that you must take into consideration is the fact that you cannot unlock any funds until you reach the age of 55. However the main aspect to note in particular is that it will free up some cash if you want to invest anything.

However, this involves sacrificing something down the line potentially which could be a pitfall, especially if you have recently been made unemployed or you want to swan off into the distance and retire early. If you decide to take out funds early you could leave yourself short in the long term with much less in later life. This is something you should definitely consider if you donít want to carry on working, as the salary you have relied on will have dried up. In addition to this, you may be able to withdraw up to a quarter of your actual fund which can be used however you want as a lump sum. Although this is a tax free figure, be wary of doing this early on rather waiting till around the retirement age which is currently around 65.

Meanwhile, if you do draw out early it means the pension fund will be decreased according to when you take it out, and if your overall pot is low it will mean youíll get even less into your seventies and eighties. In this way you will have lesser means for an annuity not to mention other products and savings that you might want to invest in after retirement. It is crucial that you choose the right fund according to your specific needs so it is important to do a search on the web as well as ask a financial advisor for counsel on the right type of products before committing large amounts of money.

Another pitfall to watch out for when it comes to your research is that some providers that exist may promote certain funds in order to take commissions. It is often better to take independent advice in the first instance. If you decide to shift your plan to another provider you will lose a certain amount of money which is something to bear in mind. You will also be liable for new account fees which will eat into your overall savings if there is really no choice but to change providers. You should check all the benefits out of the plan that is contained within your particular fund - for example, should you be paying any income tax on previous earnings?

What are the other risks as far as a pension release is concerned? You could end up using all your pot of money before you call it a day in the working world. Do leave plenty for that rainy day as a low pot will soon dwindle. Probably the most important thing to point out is that your advisor has the relevant credentials in accordance with the Financial Services Authority of FSA.

Ultimately, although this is a decision that is entirely up to you, you cannot go into this sort of thing with your eyes closed - get advice from all sides and sources to avoid making any major mistakes.

Visit http://www.pensionreleased.com/ to know more.

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