The most important fact to understand about early pension release is that it means you will forego part of your income later in your life – so it is not something to embark upon lightly. If you are considering releasing pension benefits early, your objective may be to obtain a tax free lump sum. Before you proceed, you must be satisfied that you have a genuine need for cash which justifies the loss of income you will suffer later in your life.

Our specialist pension adviser will inform you of the facts and figures involved, and other issues you need to consider before a final recommendation is made. However, you are the best-placed person to understand if your objective for cash is real (and therefore justification for the cost of early pension release) or not. Unless you have a genuine need, releasing pension benefits early is unlikely to be suitable for you.

Are there any disadvantages?

Taking pension benefits early will reduce the amount you will receive in retirement so it is not something to embark upon lightly. Pension release is likely to be suitable only for a limited range of consumers and circumstances which is why specialist advice is highly recommended.

There is a cost. This can include the possibility that annuity rates may be significantly different when you come to retire, as well as the loss of guarantees, benefits and discretionary increases from some schemes.

Can I still contribute to a pension?

Just because you take some tax free cash now does not mean that you cannot, at some point, continue to make additional pension contributions. Any additional/new contributions you make will still attract tax relief. Should you do this you will also be building another pot of money from which more tax free cash can be taken. At retirement all of your retained and saved funds will be added together to produce benefits.

Do I have to retire to receive a lump sum?

No – you can continue to work, there is no need to retire. However, it is not possible to arrange for funds to be released from your current employer's scheme where you are still eligible to make contributions.