Pension release simply means withdrawing money from your retirement savings. As long as you are 55 or over and have an eligible scheme then current government rules mean you can withdraw as much money as you like from your pension pot. The first 25% withdrawn is usually tax free. After that, any withdrawals are subject to income tax at your marginal rate.

Pension release is a big decision, though, as this is money you have saved up for when you say goodbye to the 9 to 5. It isn’t right for everyone because it could leave you with less to live on in retirement. That’s why it makes sense to talk with a regulated adviser, such as Portafina, first.

Is pension release right for you?

Current rules mean you have more freedom and flexibility than ever before when it comes to how and when you access your pension savings. And in our experience, the top three reasons for Portafina clients taking money early from their pension are¹:

Pension release and final salary schemes

A final salary scheme is usually a company pension that promises to pay you a guaranteed income for life from a set age. Unlike a standard defined contribution pension, the income you receive is not dependent on how the investments perform. These types of pensions are increasingly rare and extremely valuable. In many cases you can release money early from these types of schemes; although, if it is worth £30,000 or more, you have to seek financial advice before you can do so. And from a regulatory point of view, the default position is to leave these types of pension as they are. This is because by releasing money early, you would be giving up that valuable guaranteed income for life. As we’ve said before, everyone’s circumstances are different, though.