If you are aged fifty and you are thinking of cashing in your pension then experts are advising that you should act quickly. This is because on April 6 2010, the minimum age for taking your pension will rise to 55. And the process of sourcing and purchasing the right pension annuity can take up to three or four weeks. If you do not meet this deadline it could cost you thousands of pounds, because the money you will get by cashing in your pension at an earlier age could turn out to be a significant amount.
Take for example a man aged fifty with a fund of £30,000 , this would equate to an annual annuity income of £1,628.87 or just over £135 per month. Should the man wait until he is fifty-five, the annual income would be £1,735.19 a year or just over £143 per month. But in the intervening five years he would lose an income of £8,139.87.
Bob Bullivant, from online pension specialist Annuity Direct warns about the dangers of taking your pension later in life…“…it is tempting to defer taking a pension, as rates are quite low today. But this does carry a risk. annuity rates are moving all the time and while people may think they can get more by waiting, they’re forgetting the money they are losing during that waiting period.” The above example is also based on the fact that you can get the same rate for an annuity in five years time as you can today. Given that rates have been falling for the last fifteen years, there is a strong possiblity that rates will be lower in five years time.
