Immediate Cash Through A Pension Release, But Is It Right For You?

By Author: Robert Deans
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When you are aged 55 or over, you may be in a position to release as much as 25 percent of your pension in a tax free, lump sum payment. Whilst a cash lump sum payment might be an incredibly attractive option, you will have to think about the pros and cons, because it will lower your pension entitlement once you come to retire. With this in mind, pension release is not a decision to take lightly, therefore you really should think carefully before deciding if it's best for your needs.

Pension release will be based upon the type of pension you've got. Personal pensions are yours to do with what you wish, and you are free to release cash from them should you so choose. If your pension is an employer pension scheme you might only be able to opt for a pension release should you no longer work for the employer, and therefore the employer is no longer making contributions.

Firstly, consider why you wish to release money from a pension. Should you be simply planning to treat yourself, maybe to a holiday then a pension release may not be the right choice and you may be better seeking another way to finance ...
... it. You need to remember that you will count on your pension for daily essentials after you retire and when an earlier pension release means you end up struggling you may regret your choice.

Obviously this may depend upon the size of your pension fund, you could have been contributing all your working life or you might be in a generous scheme. In this situation you could have a accumulated a sizable pension fund, so are able to afford to consider a pension release. Even so, depending on your plans you could decide that the money is better off being left to have enjoyment from when you actually retire.

You will find situations though when a pension release may be incredibly helpful, and well worth the reduced payments in later life. You could at present be burdened with debts that attract high interest rates, in cases like this a pension release to pay these debts may leave you financially better off in the long term. And even if this isn't financially your best option, the feeling of weight lifting off your shoulders that clearing a debt may bring, might be well worth the pension loss alone, particularly when thinking about the risks associated with stress as we get older.

Similarly, a pension release can be beneficial in repaying the rest of a mortgage. Whilst interest levels are currently quite low, they may not stay like that and the interest soon can add up over the duration of a mortgage. This is why it may be a wise move to opt for a pension release to settle your mortgage, if only to stop paying interest for many years to come.

If after considering both the positives plus the negatives you feel a pension release is the right choice, you will find companies giving independent financial advice who are able to help you to get the process started. Such companies might also help you evaluate your individual circumstances, to make sure your final decision to apply for a pension release is an informed decision and will be suited to your circumstances.

This article was written by R. Deans on behalf of Robert Bruce Associates, experts in pension release. For more info on pension release please visit rbaifa.co.uk