Pensions can be complicated and confusing. You find yourself asking questions such as: When can I access my money? And how much can I take? Luckily, Portafina has some advice for anyone thinking about trying to retire and take their pension at 55, and laid out some of the pension options at 55 available-What options are available? With the correct type of pension scheme, there are various pension options at 55. You can release part or all your savings, withdraw a regular income, leave your pension intact is, or sell it to an investment company and in return get a guaranteed income for life.
The best option to suit you depends on your current situation, your future plans and other investments or savings that you have. With the majority of schemes you cannot take money from your pension before the age of 55.1t is noteworthy to know that taking money out of your pension before retirement age can mean you have a smaller income for the future; it should not be thought as a simple way to make money. That is why it is important to get advice before making any decision about your pension.
Tax-free cash from your pension
There are many cases where you can take out a certain quantity of money from your pension tax-free. On average for personal and workplace pensions, this limit is 25%. Different schemes have different limits and can affect your guaranteed amount from a final pension.
This involves withdrawing money from your pension before retirement age, (60-65) but not before the age of 55. While you can release from personal and workplace schemes in most cases, what is know as a “Final Salary scheme” is different. You will need to transfer the money to a personal scheme and run the risk of losing a guaranteed life-long income.
Going into a pension drawdown means that you have started taking an income from your pension scheme. This can be in regular payments or as lump sums. Taking your Whole Pension
Certain pension schemes allow you to take all of your savings at the age of 55. This isn’t advisable, and it is best to keep money in savings or invested for the future.
Buying an Annuity
This involves selling your pension to an insurance or investment company, and they pay in a guaranteed life-long income. While it sounds good, they have become inflexible and rates haven fallen over the last decade.
Pensions you can & cannot access from 55
When you reach 55 you get the option of taking money from personal or private pensions, and most workplace schemes. However, if you wish to do this with a final salary scheme, you first have to transfer the amount to a personal scheme. Government or Civil service pensions don’t allow you to take money early.
Taking money from your pension before 55
It is only on rare occasions that companies allow you withdraw money from your scheme before 55. If they do, be cautious as it may be a scam. Find out more on Portafina’s reviews or follow them on social media for more tips: @Portafina on Twitter. You can also find helpful advice on the Portafina Channel on YouTube.