Pension comparison & annuity comparison services » pension loan information

Pension loans

Wed, 07 Sep 2011 09:49:31 +0000

When dealing with a company that offers pension loans, you need to be very, very careful that the company you are dealing with has explored all of the issues surrounding their scheme. if not then you could be in danger of flouting the Pension Regulator’s rules on pension liberation. As with all transactions you should adopt the principle of caveat emptor and understand that with any financial transaction, there are potential risks.

Individuals should be aware that such pension loan arrangements may result in significant tax consequences and that HMRC will investigate each pension loan scheme thoroughly to ensure that there is no wrongdoing. If the scheme has not been set up correctly, HMRC may tax your loan at 60%. As an example, if you had a £100,000 pension and you were able to take a loan of 50% of it (£50,000), the Revenue could tax you £30,000 of that £50,000 and they will look very closely at the remaining pension fund to see if that flouts any rules.

Some schemes state you can take a loan of 25% and some state you can take a loan of 50% so you really need to do your homework. However, as we are not privy to the individual scheme details, we cannot state how compliant, tax efficient or otherwise these schemes are so please make sure you undertake your own in depth enquiries.

When dealing with a pension loan company, make sure that you ask for documentation relating to where your pension is being invested

Please speak to an appropriately qualified professional before making any decision regarding your pension.

Pension unlocking

Tue, 06 Sep 2011 17:35:20 +0000

Pension unlocking is (usually) another variation on the theme of pension loans. Again, just make sure that you know the ins and outs of the scheme before you commit yourself.

Pension release

Tue, 06 Sep 2011 17:35:09 +0000

Pension release is a way of releasing cash from a pension fund but (usually) only when the pension holder has reached the age of 55. The percentage of what can be released is usually limited to 25% so if you deal with a company that offers you more than this then you are probably delving more into the realms of a pension loan (see previous posts). You don’t have to take the full 25% because if you prefer you can take smaller percentages of say 10% and the remaining 15% can be taken at retirement.

Pension advance

Tue, 06 Sep 2011 17:34:56 +0000

A Pension advance is often used as another term for a pension loan although some firms do use this phrase to describe pension release which is a completely different thing. Pension release is usually only available to people over the age of 55 because below that age, you will be looking at a pension loan which is completely different.