Over 55 and in financial difficulty due to Covid 19, you can take the opportunity of pension freedom as solution to Covid 19 financial impact.
Pension freedom allows personal pension planholders to take as much cash as they want from their pension fund from the age of 55. This can be an attractive option for those in mortgage difficulty, but there are two key factors to consider:
- Only 25% of the fund can be taken tax free, with any excess added to income for the year. This could result in a large (and unexpected) tax liability, which, in turn, could lead to less cash than expected.
- The planholder’s income in retirement could be significantly reduced as a result of using the pension fund in this way. In addition, because they cannot take cash from their fund before the age of 55, they will have only limited time to rebuild their pension fund for retirement.
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