Pension Release Questions and Answers
Am I eligible?
If you're aged 50 or over with money in a pension that you're not already receiving then you are eligible to receive a tax free cash sum and/or income now.
This rule is changing.
In April 2010 you will not be allowed to get money out of your pension from age 50 but will have to wait until you're 55.
So for anyone currently aged under 53 and likely to need to access their pension soon - BE CAREFUL to act sooner rather than later. You will need to act well before April 2010, because after this date you’ll be classed as too young to access your pension until you're 55.
How much money can I get out of my pension?
This will depend on how much money you have in your pension in the first place; with your permission we'll find this out for you. It will then depend on whether you want to take a cash lump sum or if you're looking for income, or both. You can find out about your pension by completing the "Get Started" form to the right.
CASH LUMP SUM - Whilst you're not allowed to take more than 25% of your pension fund tax free, there are ways that you can increase the immediate total cash sum you receive by drawing down a one-off annual payment without having to continue with an ongoing regular income.
This is an option that wasn't available before April 2006 and may still not be possible with your existing pension. However; there is a way it can be made available to you.
INCOME - How much income you can have from your pension will depend on a number of things, such as your age, health and what death benefits you want included.
You also have a choice about whether to buy what is known as an annuity, or leave your pension fund invested and "draw down" an income each year. When you want to take income from your pension you don't have to take it from the pension plan provider with whom you have been saving. In fact it's probably better that you don't! In other words, you may save through a pension for many years but when you decide you want income from it you can shop around for the best deal. All pension plans include an Open Market Option. This is a 'get-out' clause which gives you the right to have your income paid by a different provider. To put it another way, it means you can and should shop around for the best deal for your money - remember it's your money!
How much will it cost me?
This is a difficult question to answer without knowing what pension you have or what it is you want to do.
Some pension providers have a charge if you're looking to get cash out early, although most of them don't. Any transfers to a new provider are also going to have setting up charges, which usually include an amount paid as commission to us.
We do not charge a fee so you will not have to pay us anything just to find out what your options are.
With any recommendation we make you will be told exactly what costs and charges there are before you decide what you're going to do.
If you don't do anything then you don't have to pay us anything.
Will I have to see an adviser face to face?
No. Everything is conducted by a combination of Telephone, Royal Mail and Email.
What types of pension schemes can be accessed?
Most pension schemes can be accessed either directly or by transferring them into one that can. Grove Financial Planning specialises in ALL UK Pension Types.
These could be Personal Pensions, Stakeholder Pensions, Protected Rights Pensions and "old style" Retirement Annuity Contracts. They could be any type of Company Pension Scheme, Executive Pensions, Section 32 Buy Out Bonds, Final Salary Pension Schemes (also known as Defined Benefit Schemes) or Money Purchase Schemes (also known as Defined Contribution Schemes).
Will this affect my state benefits?
This will depend on what benefits you're receiving and how much money you want to take out of your pension. It will also depend on whether you take an income now or a lump sum.
The decision as to whether your benefits are affected is usually made at your local benefits agency so you'll need to check with them. However; we'll be able to advise you how most benefits are usually affected.
In a lot of cases your state benefits are not affected if you simply adjust what you take out of your pension. Again, we will be able to let you know about this before you make any final decisions.
Is this a loan?
No. This is not a loan because the money is already yours; it's simply a case of getting your own money out of your pension.
Am I selling my pension?
No. You would not be selling your pension; in fact the rules don't allow you to. Again, this is simply a case of you taking money out of something that is already yours.
Do I have to retire to get money out of my pension?
No. You can get money out of your pension and continue to work.
If, however; you are an active member of your employers occupational pension scheme then it is extremely unlikely you should even consider taking money from that type of pension early.
If I take ongoing regular income how will this be paid?
You have the choice of having it paid annually, half yearly, quarterly or monthly; either in advance or arrears and either increasing each year or remaining level in payment throughout.
In the event of your death you can also make provision for a pension to continue to be paid to your spouse or partner or dependents.
Will I have to pay extra tax?
You can take up to 25% of your pension fund tax free. The remaining fund must be used to provided income, whether this is a one off payment used to increase the amount of cash you receive in your first year or, a regular ongoing income, it will be classed by the Inland Revenue as earned income and taxed at your highest rate. For most people this would be taxed at the basic rate of income tax.
What happens if I die?
With your existing pension it will depend on the rules of the arrangement. This is one of the things we'll look into for you.
The death benefits of any new arrangement will depend on which options you've chosen.
We'll provide you with full details about your options and explain them to you in a way you can understand.
So what's the catch?
The most obvious problem with taking any money out of your pension now is that it won't be available for you at a later date. You therefore need to make sure you're making the right decision.
You should always think about whether you would be better off borrowing the money you want instead or, if you have other savings or investments should these be used rather than taking money from your pension.
If you're considering taking money from your pension early you need to be aware that it would only be suitable for a very limited number of people and circumstances and it will almost certainly reduce your pension income in retirement.
We will look at all your options and make a recommendation that takes this all into account. Remember, there is no cost or obligation for you to find out what your options are.
A wealth of experience in Pension Release..
Grove's founder started in financial services 25 years ago in 1982 and he first started to specialise in pensions over 20 years ago.
This experience and knowledge is extremely useful when trying to unravel the complexities of pensions and the changing legislation surrounding them over the past 20 years.
He started to exclusively work in pension release over 10 years ago, when he was working as the specialist pension's adviser for one of the leading companies in this field at the time.
He has already personally helped thousands of people release money from their pensions so you can be confident Grove Financial Planning will provide you with the service you'd expect from this wealth of knowledge and experience.
Why choose Grove FP?
- Fastest Possible Service
- Expert Advice
- Customers Treated Fairly
- Top Quality Help
- No Salesman will call round
