Unlocking pension is a term which means taking the money out from your pension scheme before you have retired. Also known as pension release, it becomes a convenient option for many depending on their health and financial condition; however others should tread carefully if they want to unlock pensions as there are plenty of things worth considering before taking this significant step.
First and foremost thing to remember here is to keep you safe from pension scams which have become highly common these days. You can easily come across advertisements luring people into unlocking their pensions. One thing worth remembering here is that the legal age for unlocking pension is fixed at fifty five years. Trying to unlock pension before that age is not only illegal, but you might have to bear massive charges for it as well. You should adopt caution in case you are suddenly approached by someone in person or through phone to unlock your pension. Also, beware of pushy advisers and companies offering loans and investment plans, as these are most likely to be scams.
As mentioned above, fifty five years is the age limit fixed for unlocking pension. Besides this different workplaces might have different age limit set for their employees, depending upon the pension schemes they have to offer. In case your employer has set a higher age limit for withdrawing your pension money, then you can opt for changing your pension scheme. More information about the same can be obtained from your employer or you can get in touch with the representatives of your company to know more about possible options to access your pension money.
In case you consider it better to withdraw or unlock your pension before the retirement age, due to any reason, then it is suggested to consider a few important aspects before moving forward. The very first aspect to consider is the amount of money you will get now, as compared to how much you might have received in case you waited for your retirement age. You should also analyse the need to arrange extra cash immediately and whether you can wait. If it is an expense which can be postponed, then it will surely be in your favour to do so or you should look for other ways to arrange the funds instead of foregoing your pension.
Pension schemes, besides money, bring along various other benefits in the form of health and death benefits, which anyone who unlock pensions might have to let go. Also, the reduced income you will get by withdrawing your pension money earlier will be able to suffice your living expenses or not is the next thing to ponder upon.
Doing all these calculations will surely give you a clearer picture of whether unlocking pension is a good option in your case or not. In case you are unable to decide, then you should look for a financial adviser, who has experience in advising people who wish to unlock pensions. His job will be to evaluate your situation and give you an unbiased advice about your next step.