Pension Loans – Are They Legal?

At the time of writing the legal status of some pension loans schemes is under question. Last year the use of “pension reciprocation plans” (which involved loans from one pension scheme to another) was declared illegal by the High Court in the UK. But since then other schemes have sprung up to allow people to get early access to their retirement fund. While these new schemes might use the name “Pension Loans” (because customers are familiar with that term) they do not usually involve any lending or borrowing.

Usually these schemes involve transferring your pension into a SIPP or another form of trust (a pension fund is a trust). During this process you may be able to “release” some or all of your pension funds immediately.

The amount of cash you will be able to release will depend on the current value of your pension fund. Generally you have to have at least £15,000 in your fund to make it worthwhile. And if you have over £30,000 one scheme we work with may be able to help you release up to 90% of the money.

Most of the “pension loans” companies you see advertising nowadays are in fact using one of these Pension Transfer or Early Pension Release methods to help you access some of your funds before retirement. You should be aware that if you do release money from your pension early, it will reduce the amount you have available when you do retire. Think carefully about your options, and if you are not certain, consult a suitable IFA (Independent Financial Adviser).

If you are unsure, or just want to talk about your options, please fill in the form at the top-right of this page, to book a free call with one of our experts. They will be able to tell you what is available for your individual situation.

Please note that our experts do not give financial advice, but they will be able to provide you with the information which you can then discuss with an IFA who can give you further advice if you are not certain whether this is the right option for you.

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