FAQ’S
Frequently asked questions and answers!
FAQ’S on pensions
At what age can I start drawing my pension?
This depends on your scheme and pension type. The Normal Minimum Pension Age (NMPA) is currently 55 (or 57 form 06/04/2028). Some older pensions may have a “protected retirement age” allowing you to draw benefits below the current NMPA. If you are in ill health, again there are exceptions to these rules. Remember, drawing your pension earlier than normal will usually mean less income or that your funds will run out quicker! Read more here:
Do I pay tax when I draw my pension?
That depends on the type of scheme you have, the circumstances you are in and what your other taxable income may be. Defined Benefit Schemes (AKA Final Salary type) usually provide a tax-free cash lump sum plus a taxable income for life. A Defined Contribution Scheme (AKA Money Purchase/ Personal Pension type) they usually provide a tax-free lump sum of up to 25% of the fund value with the rest drawn as taxable income.
What options do I have with my pension?
There are many shares and sizes of pensions but choices include:
- Take scheme benefits are the Normal Retirement Age
- Leave it and possibly allow the benefits to grow further
- Cash in the entire pension
- Withdraw lump sums or incomes to suit you
- Enter flexible drawdown (Money Purchase types)
- Buy an annuity (in other words use funds to generate a guaranteed income for a period of time (usually for life).
Learn more about personal type pensions here: https://www.citizensadvice.org.uk/debt-and-money/pensions/nearing-retirement/pensions-income-drawdown/
What is a defined-contribution pension?
Probably the most common type of pension, often a workplace pension provided by your employer.
When you reach your chosen retirement age (subject to NMPA), the size of your pension pot will depend on how much you and your employer have paid in, what tax relief has been provided (by the Government) and how your chosen investments have performed over the term.
At retirement, you usually choose either an annuity or drawdown solution to receive benefits.
What is a defined-benefits pension?
A pension scheme chosen by and sponsored by an employer. Your employer will have put money in and you may have whilst working also. Instead of each member having their own “pot of money”, for each year you worked at the company, you accrued a future promise of income which was expressed as a % of your (as yet unknown) final or average salary when you either left employment or retired. It is your pension scheme (backed by ex-employer) responsibility to pay your income for the rest of your life and is therefore considered very secure as there is usually little or no investment risk.
An AVC (Additional Voluntary Contribution) type plan can form part of your Defined Benefit policy but is usually a Defined Contribution policy.
Read more here: https://www.aviva.co.uk/financial-advice/pension-advice/knowledge-centre/what-is-defined-benefit-pension/
What is Annuity?
Sometimes quoted as a default option in Defined Contribution type plans. You “give away” your fund value in return for a guaranteed income for life. If you die sooner than expected your lump sum is lost (unless guarantees or protected periods were bought). If you live a long time, the guaranteed income is paid for life meaning it could be great value!
Read more here: https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/guaranteed-retirement-income-annuities-explained
What are GAD Rates?
These are associated with older plans that are still subject to the old style “Capped Drawdown” rules.
GAD Rates are published by the Government Actuary Department and are used in the calculation of potential withdrawals in a Capped drawdown plan. They normally use FTSE 15-year gilt yields, and members can withdraw between 0 and 150% of the published GAD rate from their funds.
How does the process work?
Here at Financial Fortress we have decades of experience allowing us to tailor the whole process around you. Generally speaking, our financial planning process can be broken down into five easy steps and is usually completed over 2 meetings. Here’s what to expect – Our Process
FQA’S on mortgages
What is a ERC?
When you arrange a mortgage you can agree with your lender a fixed rate of interest for a specified period of time, for example 2 or 5 years. If you try to pay off, replace the mortgage (or switch your deal) before the fixed term has expired then an ERC would normally apply.
These can make lending very expensive!
Read more about an example banks policy (Nationwide): https://www.nationwide.co.uk/mortgages/existing-mortgage-members/early-repayment-charges/
What is a LISA?
A LISA (Lifetime Isa) helps people save for their first home or retirement. If you contribute to a LISA, the Government applies a bonus worth 25% of what you pay in up to a set limit every year.
As at 2025/26 tax year you can contribute up to £4,000 in every tax year. If contributing the full £4,000, the Government bonus of £1,000 is applied.
The LISA has no minimum payment but does have a maximum of £4,000. Some other rules:
- Only first-time buyers can use the bonus
- Must be open one year before buying a house
If withdrawals are made for any other reason than buying a property or retirement planning, penalties and loss of interest charges will apply making them very expensive. As at 10/02/2026, the Government is consulting on replacing Lifetime ISA’s but how and with what, we are yet to find out.
Learn more here: https://www.gov.uk/lifetime-isa
What is the minimum deposit do I need for a Mortgage?
Depending on the mortgage you are choosing, the minimum needed are:
- Residential (main residence). No deposit may be needed.
- Buy to Let (Investment or 2nd homes). Usually 20% deposit is needed.
Generally speaking, the more deposit you have then the cheaper your deal will be and saving you interest along the way. (As per 2025/26 tax year)
Read more here: https://www.experian.co.uk/consumer/mortgages/guides/how-much-do-you-need-for-deposit.html
How many accounts do I need being self-employed?
There are some lenders that will accept self-employed and business owners with as little as 1 year. The majority require 2-year’s however and this will get the most competitive deals & interest rates.
We usually need limited company accounts, self-assessments details and tax overviews.
Read more here: https://www.moneysavingexpert.com/mortgages/self-employed-mortgages/
I have bad credit, will this be a problem?
It will not usually preclude you from getting a mortgage but will probably mean there are fewer lenders available and any rates would be higher. We do work with lenders that specialise in “sub-prime / none-high street” deals but we would need to understand your position in full.
Read more here: https://www.experian.co.uk/consumer/mortgages/guides/bad-credit.html
How does the process work?
Here at Financial Fortress we have decades of experience allowing us to tailor the whole process around you. Generally speaking, our financial planning process can be broken down into five easy steps and is usually completed over 2 meetings. Here’s what to expect – Our Process
If you have any questions please feel free to contact us or start a live chat with one of our advisers!