There are three types of pension plans which are available and you will have to keep a check on type of plans that you have invested in. Check out the three types of the pension plans below:
- Pension plans which are defined
- Contribution pension plans which are defined
- State pension plans
Pension release is related with the type of the plan that you have picked. In the state pension plan, it is the government that pays up for your pension while if you work in private or public sector, it is the defined pension plans under which your pension plan is categorized.
In case of defined contribution plans, it is the pensioner who contributes on a regular basis in the pot created for pension fund. Employer pays up a certain part of the fund and there is a direct involvement of the insurance company as well.
Situations under which pension can be released
Except under the following scenarios, you virtually cannot withdraw your pension fund:
- As a general rule one cannot withdraw the pension fund prior to reaching the age of 55. Any withdrawal beforehand may attract some penalties along with the terms and conditions. The first situation in which pension release is possible is the ground of ill health of the pensioner. There are some conditions which the person should meet and if these grounds are approved by the concerned authorities, pension is released in due time. In case, a person in physically incapable of work, owing to severed health, then pension fund is subjected for release.
- The pension schemes launched before 2006 provided the rules that pensioners can withdraw money from fund, before reaching the age of 55. In that case, there would be no penalties on the withdrawal of the pension fund.