Cashing in your pension may sound like rather a hasty and misguided decision. Indeed the FSA ( Financial Services Authority ) makes it very clear that in most cases you will receive markedly less should you cash in your pension chips early rather than waiting for retirement age.

The first thing to assess is your immediate need : do you really need the money now?, it is human nature to want more than you have and the minute that you look at many thousands of pounds locked up in a pension scheme with a greedy eye many ideas come to mind. It is important at this stage to try to do some really impartial reckoning and decide whether your wish for pension release is really borne of necessity or of avarice.

If you do decide to proceed with cashing in a company or occupational pension scheme you will need to get financial advice on the potential losses of unlocking these funds. An adviser will be able to offer various options of taking money out of your pension plan. For example it is possible to take out up to 25% of your pension fund tax free (known as the Pension Commencement Lump Sum or PCLS), as the remaining amount must be used to provide an income.

Just how much this income may be after cashing in your pension is dependent upon several factors such as the type of scheme you are cashing in money from, is whether is a personal or an occupational pension. All this can be advised upon by your financial consultant.

Once you have all the information at your disposal you will need to follow the correct process of cashing in the pension money for your useage. This process is best handled by someone experienced and accredited in the field.

There are many reasons quoted for pension release, the most prevalent of them are :

• paying off credit cards and other debts - we are a nation in debt it appears
• helping out children - it is harder and harder for the young to make their first venture into property
• paying off mortgage - this is always a satisfying action and many endownment policies have failed to meet expectations leaving pre retirement couples with existing and unexpected arrears
• holidays - cruises are becoming more and more popular amongst the pre retirement generation
• luxuries - like new car, extension, new kitchen

Contributing to a pension is the sensible way to proceed whilst you are earning money. Although our consumerist society urges spending and borrowing in order to keep up with the latest and greatest products and services we also need to think about tomorrow. It is your responsibility to put some money aside for yourself when you are no longer working, to either keep you going or to make luxuries a reality in your later years.

The increase of the average age in the UK has put an ever rising burden on the working population, meaning that there is no guarantee that the nation’s coffers can continue to provide for the retired population as it has done up until now.

Occupational schemes, also known as final salary schemes, pay people a generous pension based on length of service and salary. But the number of schemes is dwindling fast. Many companies are struggling to cope with the burden of final salary schemes because of crippling deficits, rising life expectancy and poor investment returns.

However there are many people of a pre retirement age who would like to access some of the funds from their Pensions sooner rather than later, enabling them to either provide a little money to their children or maybe pay off some debts ( an ever more likely reason ).

The process by which you release funds from your pension is often called pension unlocking as prior to this your pension funds were considered to be inaccessible and locked until retirement age. Government legislation has made it possible, now, to unlock funds from either occupational or personal pension schemes after the age of 50 ( though this figure is set to rise to 55 in 2010 ).

It may appear to be a rather hasty decision, and one which ironically has already beeen taken by those in charge: Gordon Brown has already been accused of having buoyed the UK economy by perpetrating a massive theft from the nation’s pension coffers whilst it is common knowledge that many large companies will be unable to meet their pension commitments in the near future.

So unlocking is certainly an option, it will mean, inevitably, that you will receive less income at retirement age than if you waited until the policy to mature. However, in this uncertain economic climate it may just as well to consider a bird in the hand to be worth just as much as two in the bush.

In order to unlock your pension it is advisable to speak to an FSA accredited adviser who will be able to explain to you the options available and at the same time mention the pro’s and con’s of unlocking your pension. It is necessary to be aware of all possible repurcussions when making an important financial decision.

In the face of the credit crunch and impending fiscal doom into which the earth in about to be plunged I would be swayed into the option of pension unlocking, had I contributed to a scheme; I have not. There are uncertain times ahead and I advise speaking to an advisor regarding pension unlocking and getting hold of as much money as you can as soon as you can.