Unfortunately, in most cases it is highly likely that you will lose out throughout your retirement if you release pension benefits prior to retiring.

The government allows anyone with a personal pension to unlock up to 25% of the fund once they reach the age of 55, without retiring. This is known as pension release and can be beneficial in some cases, but does have disadvantages.

release pension benefits prior to retiring

If you withdraw large sums of money early, you will obviously have less money when you retire – meaning a smaller annual pension income. However, in some situations, it can actually be a help if you do it having taken all things into account.

Financial difficulty

If you are struggling with your finances, releasing your pension may help but it should only be considered once all other options have been exhausted because you run the risk of financial struggles in retirement too.

If you are having trouble with your finances, it is strongly recommended that you seek independent financial advice regarding pension release.

You don’t want to obtain another loan

There are times and situations in life when it makes complete sense to release pension money. However, if you do not have a viable reason, or it would cause financial problems throughout your retirement, it is usually not recommended.

Your financial adviser should  and ensure that you are aware of how pension release could impact on your life.

Due to the nature and complexity of pension release, it should not be considered in the event of short term, or trivial financial difficulty.

More often than not, these situations are resolved before the pension benefits are released.

Contact Pensionlite today to discuss whether releasing pension funds early could benefit you, or for more information on release pension click here.