Many people are looking for ways to use their pension to access money early, before the age of 55. “Pension loans“, “pension release” and “cash in pension” are three terms that are often used by people who basically want the same thing – to get money from their pension early.
If you are in this situation, please fill in the form on the right to book a free consultation with one of our experts. There is no obligation, and you will be able to find out what options are available to you in your situation. Different schemes are available, depending on how large your pension is, your age… and other circumstances. So, while we try to explain some of the options in this article, the only way to find out for sure what could work for you, is to book a call!
New products and services are often created in this sector. We try to keep this site up-to-date, but by the time you are reading this, new options may be available… or old ones may no longer be used. Please consider this as just a rough guide, and not as any kind of advice. If you are considering major changes to your pension, please consult a qualified IFA (Independent Financial Adviser).
Releasing A Pension Early
It is usually only possible to access the cash in your pension early (before the age of 55) if you have a serious illness. Otherwise you may face a serious bill from the tax man. It used to be possible to transfer large pensions into a special kind of trust that allowed you to decide what you did with the money, but this option is not available at the time of writing. That leaves two main ways of using your pension –
- Pension Loans
- Transfer Cashback
Pension loans “do what they say on the tin” – a loan may be offered to you, with the suggestion that, if you have not paid it back in other ways beforehand, you will use cash from your pension to repay the loan when you retire. These are usually only available for larger pensions, over £100,000 (or several smaller pensions that add up to more than £100,000). The size of loan available will depend on the size of your pension and other factors – please fill in the form at the top right of this page if you want to find out whether this option is available for you.
Please be aware though, that one type of pension loan scheme was ruled illegal by the UK High Court in December 2011. “Pension Reciprocation” schemes are now illegal – these kind of schemes involved several people transferring their pension funds into a central fund, which then made loans to other members of the scheme. Be sure to ask any pension loan providers you speak to whether “pension reciprocation” is involved in their scheme. It is unlikely, since the High Court ruling, but better to be safe than sorry!
Transfer cashback is a variation of the old-fashioned “incentive” that many companies offer you for switching to their product or service – as cashback payment when you sign-up. Many companies offer a bonus for transferring your pension into their fund. This bonus can vary from a few hundred pounds to several thousand, depending on the company, the size of your pension, and other factors. This option is usually available for people with pensions larger than £20,000. If you’d like to discover whether it would be available to you, please fill in the form on the right of this page to book your free consultation.
Proceed with Caution
It sounds obvious, but remember that if someone offers you the possibility to release money from your pension early that money may not be available to you when you retire, whereas with a pension loan you are borrowing money against your pension – and that means you have the option to pay it back in full, leaving your full pension unaffected. If you are in any doubt about your options please book a call to discuss them, using the form at the top-right of this page. And then please contact a qualified Independent Financial Adviser before making a decision.