Why so many over 55s take pension cash early

Between April 2015 and September 2017, *72% of people dipped into their pension pot before the age of 65. In fact, some people have even withdrawn it all! Hang on, did we just say before the age of 65? That’s right. From the age of 55, you have the option to take lump sums of money from your pension, the first 25% of which is tax free. But why are so many people thinking about taking money from their pension pot early?

Let’s look at the top 5 reasons tax-free cash was taken in 2018**:

Turn 55 soon? Here’s 4 things you need to know:

1. You can opt to release up to 25% of your pension savings completely tax free.
   
   
2. You can opt to take all your pension savings in one lump sum. If you do this or take a lump sum of anything over 25% of the total pension value, you will be subject to income tax at your marginal rate. Not only do you lose your hard-earned money to the tax man, but you will have significantly less to fund your retirement.
   
   
3. You can leave your pension exactly as it is. Your savings can continue to grow meaning you have more in the pot when you need it.
   
   
4. Or, Pension Access can review your current pension performance and find out if you could be in a stronger financial position when it comes to retirement. Plus, if you decide you want to take some pension cash early, we can help you to do that, providing you have an eligible scheme.

There are more options available. To make the right pension decision for you, the best thing to do is to speak to a financial adviser regulated by the Financial Conduct Authority. Taking money early from your pension might not be right for you, as it will leave you worse off in retirement; it shouldn’t be seen as an easy way to raise money. That’s why it makes sense to get financial advice before making any big decisions.

Big decisions benefit from great advice

As pension advice specialists, here is what Pension Access can provide you:

• A no obligation pension check
• Impartial advice from regulated specialists
• Ongoing advice and management of your pension
• Fast, efficient service – we make the process easy for you

* Financial Conduct Authority Outcomes Review: June 2018
**Data and statistics provided by Pension Access. Primary and secondary reasons for taking tax-free cash in 2018 – 1st Jan to 21st Nov 2018

Taking pension money early is not right for everyone as it will leave you worse off in retirement. Also, tax treatment depends on your circumstances and is subject to change. That’s why it makes sense to get help from a regulated specialist.