Pensions Release: Commonly Asked Questions
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On our receipt of your signed letter of authority it normally takes up to three months. However this is dependent on your existing pension provider giving us all the necessary information.
Accessing money from your pension earlier than your normal retirement age is known as unlocking your pension or pension release. Pension release is unsuitable for the majority of people as taking money from your pension now will result in a smaller income when you come to retirement. However there are numerous reasons why many people do release cash.
To gain access and release money from your final salary/defined benefit pension it will need to be transferred into a personal pension plan, called a Flexi Access Drawdown Pension with one of the major UK providers. Once the money is transferred to the new pension provider the tax free cash is paid direct to your nominated bank account. The remaining fund will then remain invested until retirement or, if required, under the new Pension Freedoms and Choice Rules you can even access the entire pension fund!
Current rules allow you to release a tax free cash lump sum of up to 25% of the value of your pension fund. This is tax free and is know as a Pension Commencement Lump Sum.
It is possible to release less than the maximum 25% and draw more later. You can also continue to contribute to your pension, which will build up more tax free cash for the future. Also, under the new Pension Freedoms and Choice Rules you can even access the entire pension fund
If you want to explore whether you are eligible for pension release then:
- Complete the online enquiry form on the home page to confirm you are eligible
- If you are eligible complete our on-line enquiry and information
- Print off and send us the completed ‘letter of authority’. These are pre-populated from your information input
- We will do the rest!
Once we receive the letter of authority we will contact your pension provider and obtain the Cash Equivalent Transfer Value from the pension scheme administrators. We analyse this information and send you a comprehensive report, which contains information on how much cash you are able to release.
To complete the process and obtain your tax free cash you will need to complete discharge forms issued by the pension scheme administrators and an application form. Once these have been completed you should receive your cash in 5 to 6 weeks.
There is no charge for the work carried out up to issuing your report. Our terms of business which you will need to accept as you go through the information gathering stage sets out how and when we are paid. The pension provider that will release your tax free cash and hold your remaining funds pay us a fee dependent on the size of your pension fund. This is only paid on completion of the transfer and cash release process. The payment sum is deducted from your pension fund.
No. Our entire process is conducted online, email and via post.
No. The money is already invested in your pension. You are simply accessing it now rather than when you retire. There are a number of web sites offering a loan of up to 50% of your pension value. These are not recognised UK financial products. You are expected to sign over your pension rights which will then go to the lender on death. Clearly it is not advisable to do this as you will receive no income at retirement!
Up to 25% of your pension can be released totally free of income or capital gains tax, even if you are a higher rate tax payer.
No. You are not able to sell your pension fund. Pension release is a way of accessing money which is already yours prior to your normal retirement date.
No. You can continue to work, and even continue to contribute to the pension arrangement. However you will not be able to release money from your current employer’s pension scheme.
I still have questions!
If there are any further questions you would like to ask please contact us and we will reply to any questions or queries you might have.