The process of taking out money from your pension account before you have reached the eligible age is known as pension unlocking. In the need of financial aid Can I Cash In My Pension Early? , this could prove to be an ideal method of generating funds. However, this benefit also comes with many hidden risks, which one should be aware of to avoid taking a wrong decision.
For people who have reached the age of retirement, which is 55, taking out their pension is legal and can be done conveniently. Others who are below this age but would like to access their pension money, the option of pension unlocking is available. The reasons for whether I can cash in my pension early? could be many, such as requiring money for personal expenses, medical reasons etc. One thing worth remembering here is that pension unlocking could mean that you have to sacrifice certain benefits, getting proper knowledge about which is essential.
First of all, there are several types of tax advantages for people as per pension schemes. Such benefits can be accessed only if you do not withdraw or use your pension till you are 55 years of age. It means that pension unlocking could require you to sacrifice the tax advantages. However, there are specific circumstances, like someone suffering from chronic illness, in which one is able to access his pension without making any additional tax payment. Besides forsaking tax benefits, you might have to bear additional expenses in the form of penalties which are levied on individuals accessing their pension income before they are eligible for it. The types and amount of such penalties can vary from one region to another. Complete information about such rules need to be gathered beforehand, in order to make the right choice.
Secondly, many fraud companies are working with the sole purpose of cheating people who want to benefit from pension unlocking. By making false promises and sharing misleading information, they are able to persuade people into withdrawing their pension money early, only to cheat them of their entire savings later on. Such companies are operating in large numbers everywhere and you need to be wary of these. If you are also taking the help of a company for pension unlocking, then it is recommended to verify its identity, certification and reputation beforehand to avoid getting scammed.
Pension is seen as savings which a person can get at the time of need. However, if you are planning to opt for pension unlocking option then you should be aware of the fact that the amount of money you were expected to get after reaching the age of 55 will not be available then. In other words, a pension is like a guaranteed income for the future and by cashing it early you are ready to receive less money. It might not bother you much right now, but as you reach your retirement age, even a small sum could make a huge difference.
It is possible to cash in your pension early, however, it is worth keeping in mind that your pension money can prove lifesaving at the time of need and thus, a diligent approach is required to unlock this money and use it judiciously.