If you're in urgent need of a lump some of money, one way you can get hold of it is to take some money out of your pension. Accessing your pension early can usually only be done if you're over the age of 55, but some companies will allow you to do it earlier.
Many people think the pension system in the UK is unfair, because when your money is locked into a pension scheme, you can't get it back regardless of how desperate you are. Annuity rates dictate how much of your pensions you are allowed to withdraw each year and sometimes your money cannot be left to loved ones in the event of death and is instead kept by the Annuity provider. Pension valuations are also at a low due to the credit crunch.
Pension unlocking allows you to access part of your pension as a lump cash sum, also known as the Pension Commencement Lump Sum (PCLS). This sum is tax free, but the rest of your pension will still be taxed as earned income. The amount of income you receive depends on many things such as your marital status and whether the money is an occupational scheme or a personal pension.
Although pension unlocking is a quick way of accessing money, and your own money as well, so you have every right to it, it is advisable that you only use it in urgent situations. This is because it can reduce the amount of income you will receive when you come to retire. Before you look into taking money out of your pension, you should consider other ways of accessing money such as short-term loans, downsizing and re-mortgaging. Only once you have ruled out all other options should you consider accessing your pension early.
Many people think the pension system in the UK is unfair, because when your money is locked into a pension scheme, you can't get it back regardless of how desperate you are. Annuity rates dictate how much of your pensions you are allowed to withdraw each year and sometimes your money cannot be left to loved ones in the event of death and is instead kept by the Annuity provider. Pension valuations are also at a low due to the credit crunch.
Pension unlocking allows you to access part of your pension as a lump cash sum, also known as the Pension Commencement Lump Sum (PCLS). This sum is tax free, but the rest of your pension will still be taxed as earned income. The amount of income you receive depends on many things such as your marital status and whether the money is an occupational scheme or a personal pension.
Although pension unlocking is a quick way of accessing money, and your own money as well, so you have every right to it, it is advisable that you only use it in urgent situations. This is because it can reduce the amount of income you will receive when you come to retire. Before you look into taking money out of your pension, you should consider other ways of accessing money such as short-term loans, downsizing and re-mortgaging. Only once you have ruled out all other options should you consider accessing your pension early.
