FSA(Flexible Spending Account), which regulates financial services, has repeatedly warned of the long-term consequences and ramifications of releasing cash early from a pension and the potential for financial hardship later in life.
Pension drawdown, often known as pension release or pension unlocking, is the process of accessing some of the money that you have invested into your pension over your working lifetime. You can also look for the best annuity in Cornwall County Council.
Image Source: Google
If you hold a private or company pension which you are not already receiving benefits from and you are between the ages of 55 – 62 years old you could be eligible to release up to 25% of your pension as a tax-free lump sum without having to take your pension income and without having to retire.
Most Independent Financial Advisers will offer a free, no-obligation review of your pension, looking in detail at exit penalties and charges and your own personal circumstances and situation.
Because pension release will ultimately reduce the income that you will receive in retirement they will make sure that you have looked at all the other possible alternatives for raising money before embarking on pension release.
The FSA sees this as a high-risk activity and should only be undertaken when all other avenues have been explored. Taking the benefits of your pension early will affect your retirement income and your standard of living in retirement and it is vital that you seek expert advice before you try to release cash from your pension.