If you\u2019ve been diligently contributing to your pension since early in your working life, chances are you\u2019ll have a significant amount saved by the time you reach your 40s or early 50s. And if something then comes up that puts a strain on your finances, it could be tempting to consider tapping into those funds.<\/p>
But not only could this put a dent in the amount you\u2019ll have to live on in retirement, but if you take money out before you turn 55, it\u2019s also likely to see you hit with an alarmingly-high tax penalty. Anyone that tells you they have a loophole that can avoid this tax penalty and let you access your money early is almost certainly a scammer. Disturbingly, this is such a common scam that it even has its own name: pension liberation.<\/p>
Pension liberation might sound like a positive thing, but in practice it\u2019s a term often used by scammers to try to persuade those approaching retirement to access their funds early (before the age of 55). Usually, they\u2019ll try to convince their targets to transfer their funds to a too-good-to-be-true, high-risk investment fund, often for a fee.<\/p>
Of course, there might be rare occasions in which you have no choice but to access your pension funds early. Any legitimate financial firm will clearly inform you of the consequences of this in terms of any fees, loss of tax benefits and what it means for your investments. But if anyone contacts you out of the blue offering to help you \u201cliberate\u201d or otherwise access your pension before you reach the age of 55, it\u2019s almost certainly a scam. You should also steer clear of websites that claim to offer low-hassle, consequence-free ways to access your pension early.<\/p>