Can i cash in my pension?

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  • lisyloo
    lisyloo Posts: 29,555
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    clearly stating commencement ages should be enough for people to know even if they are not told outright they cannot access the money before retirement.

    You are right of course.
    However it doesn't seem a ridiculous question to ask to me if you fall on hard times and need to look at ALL options.

    There are plenty of other products e.g. mortgage endowments which are intended for a specific purpose but at certain times e.g. divorce are cashed in because of circumstances.

    I am glad that funds are ring fenced but at the same time people do sometimes need some flexibility which is why I have other homes for my "retirement savings" as well as formal pensions e.g. ISAs.
    I uderstand the downsides (no 40% tax relief) but that has to be weighed up against the ring-fencing.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    lisyloo wrote: »
    I am glad that funds are ring fenced but at the same time people do sometimes need some flexibility which is why I have other homes for my "retirement savings" as well as formal pensions e.g. ISAs.

    Indeed so. People should not equate "pension" ( a tax wrapper) with "saving and investing for retirement" ( a financial strategy).

    I uderstand the downsides (no 40% tax relief) but that has to be weighed up against the ring-fencing.
    As a higher rate taxpayer you can benefit more than most from pension tax relief if you pay basic rate tax later. But do bear in mind that the tax relief is clawed back after you retire - and for someone who is on basic rate tax while saving and also in retirement, the advantage you obtain ( the 25% tax free cash) is really hard to justify as adequate for the loss of control of the capital and all the other restrictions.

    Use of the investment ISA which provides tax free income and free access to the capital is certainly a recommended component of retirement planning.
    Trying to keep it simple...;)
  • Dick_here
    Dick_here Posts: 1,605
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    No. You're amazing.

    Thanks dad ;)
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  • Dick_here
    Dick_here Posts: 1,605
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    EdInvestor wrote: »
    the advantage you obtain ( the 25% tax free cash) is really hard to justify as adequate for the loss of control of the capital and all the other restrictions.

    Would you like to try to justify it for us, please Ed.
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  • lisyloo
    lisyloo Posts: 29,555
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    and for someone who is on basic rate tax while saving and also in retirement, the advantage you obtain ( the 25% tax free cash) is really hard to justify as adequate for the loss of control of the capital and all the other restrictions.

    Hi Ed - I also get contribution matching from my employer.
    Use of the investment ISA which provides tax free income and free access to the capital is certainly a recommended component of retirement planning.

    Yes, but it is quite limited.
    The amount I save for retirement exceeds the ISA limit so there is a tax issue here for me.
    I do know about the CGT allowance as well but I also want to use my ISA for savings and not jsut for retirement planning so the limits are an issue.
  • dunstonh
    dunstonh Posts: 115,904
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    Indeed so. People should not equate "pension" ( a tax wrapper) with "saving and investing for retirement" ( a financial strategy).

    Yes. It is so wrong of people to think of pensions as being a ....pension. :)
    the advantage you obtain ( the 25% tax free cash) is really hard to justify as adequate for the loss of control of the capital and all the other restrictions.

    Perhaps the easiest justification is that out of all the options available, the pension will provide the highest income in retirement. And that is what a pension is meant to do.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    lisyloo wrote: »
    Hi Ed - I also get contribution matching from my employer.

    High rate taxpayer with free money from employer?That's the optimal status for a pension.:)
    The amount I save for retirement exceeds the ISA limit so there is a tax issue here for me.

    7,200 a year would probably be pretty adequate for most people.
    I also want to use my ISA for savings and not jsut for retirement planning so the limits are an issue.

    NS&I Index linked certificates are worth a look as an alternative if you are stashing away cash long term.They are a great deal for HRTs.
    Trying to keep it simple...;)
  • purch
    purch Posts: 9,865 Forumite
    with free money from employer

    Free ??

    ....wot ??? they allow you to stay at home and do nothing and they still pay you ????

    Now that would be brilliant :T

    Most people have to work to get paid by their employer !!!!!!!

    I had brilliant non contributory Pensions for many years with some of my employers but they always expected me to come to work and actually do something before they paid me and funded my pension.

    Nothing is free in this world !!!!
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • curlyfairy
    curlyfairy Posts: 143 Forumite
    Right,i dont understand pensions atall,obviously,so can you tell me what happens to the rest of my money please?
    Details as follows.

    Total fund value £9,487.41

    Transfer value £9,487.41

    Last years transfer value £10,106.03

    Pension at age 65 with todays prices is £84 a month.

    Can anyone advise what a transfer value is and why is it less than last year?

    Where has the £620 odd gone?

    In a few years will i have nothing?

    Thanks again.

    Ben.
  • dunstonh
    dunstonh Posts: 115,904
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    Can anyone advise what a transfer value is

    Its the value at that point if you chose to transfer the pension to another pension.
    and why is it less than last year?

    Because the value of your investments have gone down in that period.
    Where has the £620 odd gone?

    Your unit price is lower.
    In a few years will i have nothing?

    Why? Are you predicting that every company in the UK is going to go bust? :)

    Investments grow over the long term. In the short term there will periods when the value of the investments can go down. If you look back over the previous 5 years you will see it went up every year. We were due a drop really and that is what has happened. It cannot keep going up year in year out. Its quite normal.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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