Unlock Tax Free Cash From Your Pension
We provide UK Pension Release services for those wanting to unlock tax free cash. You must be over the age of 55 to release tax free cash from a UK fund with us. We provide benefits in the form of tax-free lump sum money or income or both. Using our service now will give you the choice of taking up to the maximum tax-free cash and up to the maximum income now or you could unlock up to the maximum tax-free cash and reinvest the balance in an investment for later use as retirement income.
“Taking benefits early is likely to reduce the benefits available to you later. Pension Release should not be viewed as an "easy" way to generate immediate cash. This is only suitable for a limited number of people. A Pension should be viewed as a way of providing financial benefits for your retirement.”
Regardless of what type of retirement plan you have - be it final salary, employer contribution or personal - our experts will give you independent advice on the best way to unlock the tax-free cash in your fund now and plan for your future.
Call us now on 01732 881188
How To Apply
Applying couldn’t be easier. The first stage is to simply fill in the short form to the right side of this page. We will then send you your pack including all the forms you need to get started.
Once we receive your signed and completed forms you will be allocated your own adviser who will guide you through to getting your cash or your income or both. You adviser will also tell you in plain English if it is apparent that releasing cash from your fund isn't the best option for you.
Complete the short form to the right of this page now or call us on 01732 881188.
Pensions Ombudsman: www.pensions-ombudsman.org.uk
Advice on Retirement: www.direct.gov.uk/en/pensionsandretirementplanning/index.htm
Financial Conduct Authority: www.fca.org.uk
Introduction to taking Tax-Free Cash from your pension
This text is designed for information only and is not intended as advice. You must seek advice from a qualified adviser before taking any action.
You will be reading this because you are interested in accessing the tax-free cash in your pension and the following has been written to provide you with the information you will need in discussions with you financial adviser before you decide to draw from your pension. Tax-free cash is now referred to as a pension commencement lump sum (PCLS).
It is possible to take benefits from the age of 55 subject to scheme rules. Most personal pensions allow for benefits to be taken from age 55. For certain professions, known as 'special professions' such as professional footballers benefits can be taken earlier.
Taking a PCLS early will impact on the income you can expect later so it is necessary to take advice before. Advice will help you to understand how your income will reduce in future and if you are making the right decision. There may be other options you hadn’t thought of.
The drawdown option has had a number of labels: Pension release, pension unlocking, unsecured pension, income drawdown, pension fund withdrawal, deferred annuity purchase, for example. From 6 April 2011, legislation refers to the revised option as 'Drawdown Pension', which is an option to defer the purchase of an annuity (perhaps indefinitely) and in the interim, to maintain a facility to withdraw installments of income direct from the fund. In pension legislation parlance, designating a fund for drawdown is a benefit crystallization event (BCE) 1.
Accessing tax-free cash using 'drawdown'
Drawdown can be particularly useful for those wanting to take a tax-free cash lump sum without taking an income. Most pensions allow for a maximum of 25% of the value to be taken in this way. In order to do so some or the entire sum will have to be crystallised.
For example if a fund is worth £100,000 then 100% of it will need to be crystallised to allow for a £25,000 (25%) PCLS.
It is not a requirement that the entire fund be crystallised, it can be advantageous to only partially crystallize it. For example if a £25,000 PCLS is required and the fund is worth £200,000 just 50% would suffice. E.g. £100,000 (50% of £200,000) of the fund would need to be crystallised to achieve the desired £25,000 (25% of £100,000).
The death of the member
An important consideration is how the fund is treated on the death of the member (the person owning the pension). The pension fund trustees would distribute Un-crystallised funds taking account of the members' wishes (provided the member has made them clear to the trustee) usually without being subject to inheritance tax. However a crystallised fund would suffer a 55% tax charge if taken as a lump sum by the beneficiary. To avoid this the beneficiary could elect to carry on drawing directly from the fund or purchase an annuity in their own right in which case the income would be treated as income for tax purposes. If the beneficiary elected to remain in 'drawdown' the fund could be passed on again upon the death of the beneficiary.
The amount of income the member can draw it set by reference to the government actuarial department (GAD). Currently between nil and 100% of GAD. 100% of GAD would provide roughly what you might expect from a single life annuity. This means that those wanting to take only the PCLS and no income can do so. Thus preserving the value of the residual fund for future use to buy an annuity or to draw an income from the fund.
From the 6th April 2011 individuals over the age of 55 that meet the minimum income requirements (MIR) of at least £20,000 (of secured income) per annum are able to drawdown an unlimited amount from their crystallised pension funds, the amount drawn will be treated as income for tax purposes.
Having entered flexible drawdown there will be no restrictions on the income the individual can draw and capped drawdown rules will cease to apply.
The fund that is left after taking a PCLS is often referred to as the 'residual fund' and it can be managed in accordance with wishes. The fund can be divided up into difference asset classes to create a portfolio. The portfolio can be spread across many geographical and industrial areas, Global emerging markets; UK equities, US equities and UK fixed interest for example. There are many more. The growth expected from the portfolio will affect how much risk the investor is required to take. For example an investor wanting high growth in the long term is unlikely to achieve this if the portfolio is exposed to low risk assets such as gilts and fixed interest investments and conversely an investor wanting low fluctuations in the value of the portfolio is unlikely to achieve this a high exposure to equities. So you can see that with a residual fund comes a responsibility to manage it effectively. There will also be an associated cost.
Even if the member has no need of an income it might be worth considering taking and reinvesting it anyway. The income would be taxed but the reinvestment would attract tax relief thus making it tax neutral. However the benefit to the member could be that there will be a further un-crystallised fund from which to draw a PCLS. In addition, as we have already said, the fund is tax more favourable pre-crystallisation, if taken as a lump sum. It is worth remembering that it is not permitted to reinvest the PCLS. Always take advice before reinvesting benefits taken from a pension.