What is Pension Lump Sum Release?
Basically there is a way of getting money from your pension early, in the form of a single payment, rather than the monthly payments you usually get when you retire. The factors that affect your lump sum include:
- Rules from HMRC
- Your own health
- The amount you have in your pension fund (or funds)
- How old you are – generally you have to be over 55
If you’re a pensions expert, you don’t need any help to get a pension lump sum. However, navigating the complexities of the pension market place can be very hazardous! You are well advised to consult an expert in this field, by contacting an Independent Financial Advisor. (IFA) In many cases you can gain access to this advice for FREE.
For some people the amount of cash they can get from a pension lump sum is sufficient for their needs. For others they may require a larger lump sum. Certainly pension fund managers do tend to not like people drawing money from their pensions as a lump sum. They can, in some circumstances, make the process very difficult and complex. Further, some may say that it is not possible to obtain a pension lump sum without sky-high charges and an enormous tax liability.
Are there any other ways of getting money from a pension fund?
This is the really good news for those people wanting to get money out of their pension fund. The pension market does have ways to access the money in your pension. Whilst it is impossible to explain in this short article – mainly because each case has it’s own unique circumstances (there are ways where you can get access to up to 90% of your pension fund in cash) these are often called “pension loans” or “pension release”. You can begin to explore these options by completing the form at the top of the page.
The other great news is that, in many cases, there are no age restrictions, and there are no credit checks. It can be your most tax efficient and effective way to get money out of your pension. Find out more. Fill in the form.
Are their risks involved?
Every form of financial investment involves a degree of risk. It is certainly true that if you draw funds from your pension now then, at the age of retirement there will be less available to pay you as a monthly income.
Plus any monies that you draw from your pension may attract the interest of HMRC. You could, therefore, attract taxation on your pension lump sum. However, if you complete the form at the top of the page you maybe able to mitigate that tax burden.
While it is vital to plan carefully for retirement, if you’re experiencing financial hardships now what use will a strong monthly income be in the future. If you’re in danger of your house being repossessed. If you’ve lost your job and can’t get access to funding. If your business is experiencing a cash flow crisis that the banks are reluctant to help with. Then it is just possible that drawing a pension lump sum might just be the answer you’re looking for.
Also, as people change jobs more frequently these days it is becoming common to have several pensions from previous companies that you are no longer paying into. It may be possible to release money from these “frozen pensions” while continuing to keep your main pension fund active.
How can you use the money from your pension lump sum?
The simple answer to this is that you can use the money however you like. Unlike many other forms of loans you don’t have to justify to anyone what exactly you want the money for. Some people have decided that the money in their pension simply isn’t working hard enough. For these people they have withdrawn their funds and invested it in a financial vehicle that they think will out perform their pension fund managers.
Credit cards can be a great source of a short-term loan. But they do, eventually, need paying off. A pension lump sum could do just that.
Cash flow for businesses can sometimes be a problem. With banks being very reluctant, at this point in time, to give businesses a loan then a pension lump sum could be the answer. This could just be the financial life-line that your business needs to keep afloat.
The cost of going to University and gaining a degree can run into many thousands of pounds. A pension lump sum could go a long way to paying some of these fees.
This can be one of the real time benefits of a pension lump sum. Unlike many other types of financing you not be questioned about the ‘whys and wherefores’ of the money you require.
Watch out for those with ulterior motives
Fact: any money that you withdraw from your pension will mean that when you retire you’ll have less money left to live on.
Accountants or Independent Financial Advisors may consider that it is totally impossible to draw money from your pension fund. But the market for drawing funds from your pension is both evolving and complex. They may, or may not, be totally up to date on the latest offerings.
However, if you are in any doubt, we do recommend that you consult an IFA. Fill in the form at the top-right of this page to find out what is available to you, and what the process would involve. Then take that information to a qualified Independent Financial Adviser if you are at all unsure.