Unlocking pensions - Make sure you understand the risks.

Some information about the different types of Preserved Penion benefits that you might have if you have left an employment where you a member of a pension scheme.

Once an employee has left an employemnet where they were a member of a compnay pension schgeme they cease to be an active member of that scheme.

Usuually if you have been in the scheme for more than two years you will be left with a "preserved" or "frozen" pension.

Although the term "Frozen" is used this is often misleading as the pension will normally increase or revalue, as its correctly known, from the date you left employment and your retirement date.

In the case of a Money purchase scheme the pension will continue to grow in line with the incestmets made by the pension fund managment..

In the case of a final salary pension scheme after 31/12/1990 the pension scheme has a legal requirement to increase during the preserved period by the Retail Price Index (R.P.I.) capped at 5%.

Some schemes, usually only the Public Sector (NHS, County Council), will be more generous than they are required to be by law.

Many pension schemes are "Contracted-Out of SERPS, S2P". This in effect means that the pension scheme is responsible for part of your State Second Pension, S2P previously known a SERPS.

Final Salary Pensions
Benefits built up by contracted out final salary schemes are inflation loinked in differemnt ways for different periods and you should check carefully wht your personal position may be. You will need to know thae dates you joined and left the scheme.

Please read this information sheet carefully before making any decision about taking cash from your pension early. You must take advice from a pension specialist. They may be able to help you with alternatives and/or ensure that you maximise the return if there is no other choice. Generally speaking taking your pension early is NOT likely to be the best option. However there are occassions when thee is no choice. Seek advice from an Independent Financial Adviser before deciding.

If you unlock your pension, your income will probably be considerably less than you could expect if you waited until your retirement date. You can only use a pension fund once.

If you unlock it early, you will have less to live on when you retire.

Pension unlocking is only suitable for a very limited number of people and circumstances.

• What is pension unlocking?
• What are the risks?
• What information will you get?

Please download the file here.

The fact sheet is in PDF format and you will need the FREE PDF reader from Adobe to open it. You can obtain the Free reader by clicking on the image below.