Applying for a pension release scheme
Whether you use an online pension release company or an independent pensions adviser the process of applying for a pension release involves several stages as outlined in the table below:
| Application Step |
What Happens |
| Initial meeting/contact |
You will be required to provide your:
- full name
- residential and postal address
- email/telephone details
- date of birth
- UK residency status
- full details of your existing pension scheme(s), including who they are with and how much is in them.
You will be asked to sign an original 'Letter of Authority' to enable the adviser to obtain specific information from your pension provider(s) on your behalf (including any transfer values).
|
| Follow up consultation |
The adviser will ask for more details of your personal circumstances, i.e. why you are considering a pension release. You will also need to provide details of your current finances and anything else that may help the adviser. |
| Analysis |
Using the information you have provided and information obtained from your pension provider(s), including whether your current pension plan can release your benefits directly to you, or has to be transferred to a new plan; the adviser will analyse and identify your options, and weigh up their advantages and disadvantages for you. |
| Recommendations |
You will receive a written report from the adviser containing:
- a summary of advice given
- details of whether a transfer to a new pension provider is required
- the amounts available to release from your pension(s)
- all the charges and fees applicable
- the long term effects on your pension income at retirement.
If it's not in the written report, ask your adviser about the tax implications of taking a pension release. For example, if you choose to invest a part of the tax free lump sum, that investment may be subject to capital gains and/or income tax. Ask whether your pension credit or council tax and housing benefits would also be affected. |
| Decision |
Using the written recommendations and further discussions with your adviser, family and/or friends, you decide whether or not to proceed with the pension release. Think very carefully about whether the short term gain of getting a tax free lump sum now out weighs the processing costs and potential loss of long term retirement benefits. If you are unsure don't hesitate to get a second opinion from another independent financial adviser or agency such as The Citizens Advice Bureau. |
Keep all the paper work regarding your pension release and any new pension schemes that have been set up for you in a safe place!
If you decide to proceed with the pension release your adviser will make the necessary arrangements for you, including:
- transferring your existing pension(s) to a new provider (if applicable)
- ensuring charges and fees, such as exit fees, penalty charges for taking the pension benefits early, set up and administration fees, adviser charges, etc., are paid either:
- directly by you, or
- applied to the pension fund itself, or
deducted from your lump sum payment before it is sent to you.
- transferring the tax free lump sum into your bank account and/or arranging for any ongoing regular deposits.
If your existing pension(s) have been transferred to a new pension scheme as a result of the pension release you may also require ongoing assistance or advice regarding new investment plans that have been set up for you, so check with your adviser.
Download the Pension Release PDF Guide here - see our other free PDF guides here
Guide Contents
What does pension release mean?
Why would I need to unlock my pension early?
How do I release my pension?
Applying for a pension release scheme
Pension release FAQs
Where can I go to get more help?
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