As per the general guidelines of the insurance companies, you cannot withdraw the money before the age of 55. In case of an early pension release, you will have to pay up for the penalties and the liabilities in the form of tax which can be as high as 70%. There have been many reasons off late that people have begun to withdraw the pension money.
The reasons cited for that are illness at an old age, education of kids, house renewal or investment in some other property. For these grounds, the pension funds needs to liquid as much as possible and many insurance firms are providing for a similar facility.
Cash in pension may involve the following benefits
When you are opting for the Pension Release then take advantage of the following benefits:
- You have the option for a flexible income
- You can also get your account converted to fixed income
- Some companies also offer for the tax free cash, in general parlance, it is the first 25% of the pension fund on which no tax will not be charged
- You can put aside or withdraw your money from the pension fund pot
- Even after investment, if the money remains in your pension pot, it can be transferred to your children or spouse and this is generally free from any sort of inheritance tax
From the point of view of experts it is recommended that you should first make use of the money that you have invested in other schemes rather than the pension fund. The pension fund money is liable to some tax benefits which once withdrawn cannot get into the same safety net, so withdraw the money with these factors in mind. Any kind of ignorance in this regard may cost you dearly in the long run and withdrawal may not attract the tax benefits as well.