In the current economic climate where money and jobs are hard to come by, people are finding it increasingly more difficult to afford the cost of living, let alone being able to afford luxuries. This is frustrating enough on its own, but then adding in the fact that you may have a pension fund that has a substantial amount of money in it waiting to be spent, just makes the situation worse and harder to handle.

Pensions are a good idea for the future benefits that they bring you. However, there are also other sensible ways for you to look after your money. For the future, consider investing the money that you have into high interest accounts, property, or any of the other options that are available to you.

Throughout your life you will probably have been paying money into a pension scheme, money that you may sadly never get to benefit from. A pension release scheme is where a UK pension holder takes money from their pension fund before they reach retirement age. To be able to do this you have to apply to the Financial Services Authority (FSA) for permission. The FSA currently have strict guidelines on who is eligible for an early release, so only a limited number of people get to take up this option, providing they have circumstances that meet the requirements of the Authority.

"Should I cash in my pension early?" is a thought that is crossing many people's minds at the moment. There are advantages in doing so: the main advantage is that you will free up disposable cash that can be used to pay bills that may be outstanding, go on a family holiday or that can be used on anything you currently desire. The money that you free up could be used for home improvements, which would improve your quality of life and could also improve the value of your current assets, therefore it would benefit you in the long term.

There are, of course, disadvantages to releasing your pension early. Disadvantages which could be seen to outweigh the advantages... Even though all the money in your pension is yours, there are limits to the amount you're allowed to take out early. Usually, the maximum amount of money you are allowed to withdraw from your fund is 25%. Withdrawing that money also greatly decreases the value of your overall pension fund for when you retire. In some instances when you try and withdraw your money you are subjected to numerous tax costs that will greatly decrease your pension fund. HM Revenues and Customs (HMRC), can claim 40% of your pension fund if you are withdrawing money when you're under 55 years of age, they can also add in another 15% tax if the amount you are withdrawing exceeds a quarter of the value of your fund!

If the money that you withdraw is tax free, an early pension release is perfect for you if you need urgent cash. A loan could be seen as an option for you, however, a loan does come with high interest rates that mean you'll just be paying more money overall than you really want to. That's another benefit of withdrawing the money early, as it's all yours!

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