Pension Release FAQ - Questions Answered about Pension Release

Here are some frequently asked questions and their answers which may also assist:

What types of pension schemes can be accessed for pension release?

All UK personal pensions, including stakeholder, Self Invested Personal Pensions (SIPPs) and defined contribution money purchase schemes can be unlocked for the purpose of a pension release. Most company pensions including final salary and occupational pensions can either be accessed directly or have the option to be transferred to a personal pension, to enable it to be accessed. However, it is usually not possible or advisable to try to unlock a company pension scheme while you are still working for that company and are still eligible for contributions. The majority of public sector, i.e. local government or public service pension schemes can also be accessed for pension release schemes. Some types of defined benefit schemes such as Section 32 Buy Out Bonds S32 (pension plans that have already accepted a transfer from a defined benefit pension scheme, such as a Teachers' pension scheme) can't be accessed or transferred to a pension release scheme. State Pensions can not be accessed for a pension release.

What if my current pension scheme doesn't allow for a pension release?

In these circumstances, it may be possible to transfer your current pension fund into a new scheme, from which you can then release the benefits through a pension release scheme. But this is likely to result in higher costs so always take independent financial advice from a pensions specialist first.

I can't remember who my pensions are with or how much is in them?

The Government offers a free online pension tracing service through their website at www.direct.gov.uk for personal and employer pensions. Alternatively you can try contacting your previous employers as they should have details of any pensions you had with them, depending on how long ago you left their service.

If I transfer my UK pensions overseas, for example to New Zealand, do I still have to be aged 55 years or over to unlock my pension early?

It will depend on where you transfer your UK pensions to and what that country's tax and pension laws are. But if you transfer a UK pension to a qualifying NZ pension scheme, currently up to 40% of any money you transfer may go into an unlocked fund. You can withdraw from this unlocked fund at any time before retirement age, however, if you are under 55 years old, you may face a tax liability for this early withdrawal if you make it within six years of leaving the UK and arriving in NZ. If you have been in NZ for six years or more and/or are aged over 55 years you can withdraw from the unlocked portion of your fund with no tax issues.