Here’s How to Do Just That
You can now manage your pension so quickly, thanks to the pension reforms of 2015. However, if you are nearing your retirement, or if you are thinking about the future, you’ll need to consider your options.
Cash In Your Pension Right Now
Consider this: You’ll need to be qualified for the State Pension, and you’ll also have had to be paying money into your work pension throughout your working life. This will allow you access to each of those pension funds at different ages.
The government decides how old a person needs to be for their State Pension. If you aren’t that specified age, you won’t be able to withdraw funds every week. The age for men is 66. Women will have to be 67 (which has only been in place since 2008).
However, you can access your work or your pension earlier than that age. Once you reach 55, you can cash in all your funds or a lump-sum. The lump-sum will, of course, be tax-free, up to 25%. Tax will be charged on the remaining funds when they’re withdrawn. There is an option of buying an annuity with all your funds. The annuity will pay out a stable income until you pass away, or until the funds run out. You don’t have to stick with an annuity either. You may also reinvest your pension in something else if that suits you better.
How Does Drawdown Work?
Drawdown1 is an extremely flexible option. Many people do that instead of buying an annuity. With drawdown, you are freed to reinvest your cash into other funds, and you can also take out any amount at any time.
Now, let’s talk about reinvesting your pension. When you choose to do so, your funds will most likely go into shares, cash and bonds. The money that you’ll receive is dependent on how your funds are performing in their new location. Nevertheless, you aren’t guaranteed cash flow forever. Even though drawdown makes it so easy to gain access and release your pension funds, those funds might run out at some point.
There are external factors that influence your funs’ performance within their investment (market performance, for example). Your funds will continue increasing and decreasing as the market fluctuates, so there’s the possibility of getting less money back than you planned or started with.
However, you can always opt for drawdown if you change your mind. You can also go with an annuity. If you buy an annuity, there’s no looking back.
Can I Cash In My Pension?
Consider the pros and cons before you draw cash from your pension funds. Have a comprehensive plan ready.
PensionBee makes drawdown simple. All your old pensions will be combined so that you can easily manage it online. BlackRock, State Street Global Advisors, HSBC2 and Legal & General governs your funds.
You’ll be able to keep seeing the funds’ performance. There’s an online dashboard which will show their performance. Once you are 55, you can start taking out money from your funds very quickly. As long your bank details are verified and accurate, it will be only 7-10 working days until you get your money.
The answer is yes! You can absolutely withdraw money from your pension earlier than you’d planned or thought you could. Once you are 55, you’ll have access to your pension funds. You can withdraw any amount you wish to or need to, so if you’re stuck financially, your pension pot can be a saving.
Yes, you can! You need to be over 55, though. Your retirement fund opens up for you to manage once you turn the minimum age, and you can then decide what you want to do from there. You can withdraw everything and invest in something else, or take a little every month from your retirement fund.
Yes, you can take a lump sum from your pension pot, you’ll be taxed accordingly. If you withdraw 25% or less or your total amount, you won’t be taxed. Otherwise you’ll be charged the normal tax rate on the rest of your funds.
Once again, you can start taking lump sums or segments from your pension once you turn 55 (although this age might change). However, there are other ways to withdraw money from your pension. You can set up an annuity (a stable life-long income) or choose a flexible income (a drawdown pension).
Before Concluding, Let’s Define 3 Things:
There are certain terms which are good to know about when you’re thinking about your pension. Pension Pots, Pension Providers, and Lifetime Allowance are all very important and commonly used terms. Firstly, pension pots are your total amount of pensions you have: workplace and personal all combined, as well as any others you might have.
Secondly, pension providers are the companies that help you with your pension, like PensionBee. And lastly, your lifetime allowance is how much benefit you’re allowed to gain from your pension, which is limited.
It turns out; you can get your pension before you retire! There are many options to choose from, and luckily, you’ll have PensionBee by your side to guide you. It’s never been simpler!