According to the law, it is possible now to take some or all of the money that you have saved into your pension schemes as cash lump sum and it is referred as Pension Release service. It allows you to take up to 25% lump sum tax free amount from your pension schemes. Today, a large group of people are attracted towards this tax free cash lump sum as it gives them access to instant cash which they can invest in any instruments for higher returns or cover the emergency finance woes.

Advantages of Cash in Pension

  • They you get from Cash in Pension can be used and spend however you like
  • It gives you access to instant cash
  • It comes with greater flexibility
  • You can buy other products with the money that can pay a tax free income

How Money can be spent?

Cash in Pension is the popular option and the money can be used for different purposes. Some of the ways people use the money are:

  • Rainy day money for emergencies and unpredicted expenses
  • Holiday of a lifetime or special treat
  • Pay off the remaining mortgage or high-interest debts
  • Invest in financial instruments to generate tax free income and high returns

Considerations Before Applying for Cash in Pension

  • You can use the money as you like, but can you budget the money to last throughout your retirement years
  • Think how you will offer your spouse and family members the financial support during your retirement and after you pass away
  • How you will protect the value of the money taken out against all the inflation
  • Cash in Pension can significantly affect the guarantees your pension scheme may has
  • It can also impact the pension allowances, rate of tax and other means tested benefits you are entitled to