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With today’s economy more difficult to predict than ever, people everywhere are looking for ways to cash in on investments they made years earlier so they can meet payments, but is it possible to access your pension fund earlier to really make life easier right now? The term ‘selling your pension’ is often misconstrued but we’re here to put the record straight and give you the advice you need to benefit from your pension savings earlier than expected. Selling your pension implies that you are signing over your policy and its benefits to a third party but this simply isn’t the case. Selling or unlocking a pension fund is a process that allows those who have been actively adding to their retirement savings to cash in. However, it is important to understand that taking your pension early will reduce the entire pot, which isn’t always suitable for certain people. Whilst it may be tempting to release some cash for that home renovation or a summer holiday for all the family, it is advisable that you seek guidance from an independent body on how best to proceed. So if I’m certain I want to go ahead and sell my pension, what’s next? Whether you wish to gain access to a previous or existing pension, you must first approach a pension product provider and find the best transfer scheme for you – many providers offer a variety of schemes to make the release of pension equity that bit easier as this is fast becoming a growing market all over the world. Once you have determined a scheme that suits you, the transfer can then begin, any funds from your personal or company pension are reassigned to the new pension product and your new provider will then calculate how much tax-free cash is available. This cash is then paid to you, whilst the remaining funds are re-invested and accessed when you retire. There are restrictions on how much cash you can release as yourself and the product provider will wish to safeguard the majority of the fund so that you have enough to live comfortably after retirement. Currently you can unlock 25% of your accumulated fund as a tax-free cash lump sum. You can also choose to release less than the maximum 25% and remaining funds can then be accessed at a later date. Generally once the process has been started by your new pension product provider, you will receive your cash in around 3 to 4 weeks. However, be on your guard when enquiring about releasing funds from your pension pot! As well as product providers accommodating the new movement, fraudsters have also caught on and in recent years have been targeted unsuspecting people looking to get their hands on some extra cash. In these tough economic times, it is tempting to jump in without doing some much needed research but put the time in to check out your product provider before you sign on the dotted line. Beware of sales people approaching you with release products that are too good to be true, there should be no upfront charge for unlocking your pension so look out for the warning signs and say ‘no thanks’ if it doesn’t quite feel right!
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