Withdrawing your pension early might seem tempting for some. If you’re lucky enough to be retiring at the age of 40, you might be keen to get your hands on your pension ASAP. However, it’s important to look out for and protect yourself against mis-sold pension release scams. If you’ve already fallen victim to a pension release scam, we’ve got some practical and legal advice to help you claim in our complete guide. Take a look.
What is an early pension release?
Also known as pension unlocking, early pension release allows you to withdraw your work pension before the age of 55 (the minimum pension withdrawal age set by the government). However, unless you meet certain criteria for pension release, you’ll likely be charged a hefty amount of tax and you could fall victim to pension release scammers. Unlike work pensions, state pensions cannot be withdrawn until your mid-60s.
Can I withdraw my pension before 55?
There are two rules that allow you to withdraw your pension before you’re 55.
- If you’re suffering from a serious illness and would like to retire early. Your pension provider will help you out with this, so it’s best to avoid any third parties. In this circumstance, you won’t receive a hefty tax bill from HMRC.
- If your pension plan has a pre-agreed protected retirement date, often included in the pensions of sports stars. However, this must have been agreed before 6th April 2006.
If you don’t fit the above criteria, you can most likely still withdraw your pension before the age of 55 but you’ll receive a hefty tax bill from HMRC. You could pay up to 30% of your pension pot to the third party helping you withdraw, along with 55% tax, leaving you with just 15% of your pension.
How to protect yourself from a pension release scam
Avoid cold calls
As tempting as it might sound, if somebody calls you up claiming to help you get your pension at the age of 35, it’s highly likely it’s illegal and a scam. They might also claim the offer is free, which is often a telltale sign of a scammer.
Are they authorised by the FCA?
Any third party attempting to help you release your pension early will unlikely be authorised by the FCA (Financial Conduct Authority). You can check the FCA register to see if they’re on there.
Ask about the options and risks
Always ask FCA-authorised advisors to explain the risks and your options before jumping into anything. If the risks aren’t explained to you, or you’re not given the chance to shop around for other options, you’re being mis-sold which is most definitely illegal.
What to do if you’ve been affected by a pension release scam
If you’ve already been mis-sold a pension release scam, you should contact a pension claims expert for legal and professional assistance.
Our expert claims advisors can help you claim compensation. With years of experience, they understand that each case is different and will take every detail into account to help you claim what is rightfully yours. Fill out a quick form today to get started with your claim proceedings.