How to raise emergency cash

Pension freedoms introduced in 2015 mean you can usually take some or all of your pension out once you reach the age of 55.

If you did this, you’d pay no tax on the first 25% of this money, but the remainder would be taxed at your income tax rate.

Pension freedom rules only apply if you have a defined contribution pension, sometimes known as a money purchase pension, where the amount you’ll receive at retirement depends on how much you (and your employer if it’s a company scheme) have paid in, and your investment returns. They don’t apply to defined benefit or final salary pensions, which provide you with a retirement income that is equivalent to a proportion of your final salary.

Accessing your pension to help with your cash flow can seem a tempting option, but it’s vital to think about the consequences this might have on your future retirement income. If you’re considering taking money out of your pension, always seek professional advice or guidance first.

If you’re 50 or over and have a defined contribution pension, you can get free guidance over the phone on the options available to you from the Government’s Pension Wise service. However, if you want personal recommendations or advice about your specific circumstances, you’ll need to seek professional financial advice. You can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guides on How to Find the Right Financial Advisor for You or How to Get Advice on Your Pension.

If you are considering getting financial advice, VouchedFor, the review website for financial advisors, is offering Rest Less members a free pension check with a local advisor. There’s no obligation but once you’ve had your check, the advisor will discuss the potential for an ongoing relationship if you think it might be useful to you. 

Author: wpadmin

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