Release cash from your pension

With a Pension Release scheme Contractors can unlock a tax free cash lump sum from your pension, giving you the freedom to do those long awaited home improvements, build up a financial buffer in uncertain times or take that holiday of a lifetime. Andrew Gains explains that as long as you are over the age of 50 you can continue to work and can even contribute fresh funds to your pension that will attract the usual attractive tax breaks.

Whilst everyone appreciates the need for a pension to provide a nest egg for your future retirement, it can sometimes seem like a long wait before you can access your hard earned cash. However, with an innovative couple of schemes that have recently been brought out by pension providers you can access a cash lump sum from the age of 50 onwards (over 55 from 2010), giving you the opportunity to enjoy a large part of your savings at a time to suit you. If you have an immediate need for cash, to pay off some debts, to purchase a property, add money to a business or complete some home improvements, Pension Release could be the answer.

How does it work?
Pension Release allows you to draw up to 25% of the fund value of your pension as a tax free cash lump sum for whatever purpose you have in mind. Whilst this lowers the overall value of your retirement fund, it can prove a useful source of capital for Contractors, particularly if you are out of a contract for a long period of time or if you just need some extra cash to invest elsewhere. The fact that it is a tax free lump sum means that it can offer a more attractive option for gaining access to funds than applying for a high street loan that will attract interest and need monthly repayment.

You don't have to be retired to take advantage of Pension Release. The only proviso that needs to be taken into account applies to permis who are members of a traditioal company pension because the lump sum cannot be drawn from your current employer's pension scheme where you would like to continue making contributions.

On release the remaining fund is simply invested into an area of your choice until you choose to retire and take an income from your pension. The level of investment risk applied to the remaining money can be tailored to your unique needs.

Is Pension Release right for me?
Whilst Pension Release can represent an attractive option for some, it may not be suitable for everyone. The drawback to taking your tax free cash early is that your income in retirement will probably be less than if you waited until your normal retirement age and will mean that you will have less to live on when you retire. As such pension unlocking is only suitable for certain people. It is important to consider your individual circumstances before making a decision and our expert advisors can help to find the right solution for you.

To find out more about unlock your tax free cash sum contact us on 0845 062 8888 or email andrew@contractorfinancials.com

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