Cashing in your pension may sound like rather a hasty and misguided decision. Indeed the FSA ( Financial Services Authority ) makes it very clear that in most cases you will receive markedly less should you cash in your pension chips early rather than waiting for retirement age.

The first thing to assess is your immediate need : do you really need the money now?, it is human nature to want more than you have and the minute that you look at many thousands of pounds locked up in a pension scheme with a greedy eye many ideas come to mind. It is important at this stage to try to do some really impartial reckoning and decide whether your wish for pension release is really borne of necessity or of avarice.

If you do decide to proceed with cashing in a company or occupational pension scheme you will need to get financial advice on the potential losses of unlocking these funds. An adviser will be able to offer various options of taking money out of your pension plan. For example it is possible to take out up to 25% of your pension fund tax free (known as the Pension Commencement Lump Sum or PCLS), as the remaining amount must be used to provide an income.

Just how much this income may be after cashing in your pension is dependent upon several factors such as the type of scheme you are cashing in money from, is whether is a personal or an occupational pension. All this can be advised upon by your financial consultant.

Once you have all the information at your disposal you will need to follow the correct process of cashing in the pension money for your useage. This process is best handled by someone experienced and accredited in the field.

There are many reasons quoted for pension release, the most prevalent of them are :

• paying off credit cards and other debts - we are a nation in debt it appears


• helping out children - it is harder and harder for the young to make their first venture into property


• paying off mortgage - this is always a satisfying action and many endownment policies have failed to meet expectations leaving pre retirement couples with existing and unexpected arrears


• holidays - cruises are becoming more and more popular amongst the pre retirement generation


• luxuries - like new car, extension, new kitchen

We have found a wealth of information on the subject on the FSA Government website as well as an informative guide online about cashing in pensions at the GroveFP website.