Frequently Asked Questions

We asked a leading Pension Release provider* to provide answers to common questions they are asked about Pension Release:

Am I eligible for Pension Release?

If you’re over 55 with money in a personal or former company pension scheme, you could apply for early pension release and take your tax-free cash lump sum and/or income early. This service does not apply to State Pensions.

Do I have to pay tax on the money?

The lump sum payment is tax free. However any income you receive is viewed as part of your regular income by the HM Revenue and Customs, which means that you may have to pay income tax on it depending on your personal circumstances. However tax rules may change in the future.

Do I have to pay monthly premiums to the policy?

No, in fact you can't pay any more into it.

The purpose of this is for you to look at being able to take your money now as either a lump sum, income or a combination of both.

Can I continue to work whilst taking early benefits?

In most cases, yes.

You can draw on your pension once you reach 55 and continue to work. Many people continue to work even though they are drawing their State Pension and are over retirement age.

HM Revenue and Customs will include any pension payments you receive as part of your income when working out how much tax you owe. This is normal and will happen whether you access your pension now or later.

It’s not for everyone

It is worth pointing out that the whole purpose of making contributions to a pension scheme is to provide an income during retirement. It is therefore important to be aware that releasing your pension benefits early could reduce your income and your standard of living in retirement. This is why Pension release is only suitable for a limited number of people and circumstances and shouldn’t be seen as an easy option to raise cash.

*Courtesy of Portal Financial LLP

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