The MSE Forum will be undergoing some maintenance this evening. As a result, some users may experience temporary performance issues. Please use the Site Feedback board to report anything major. Thank you for your patience.

Can I "cash-in" my personal pension somehow ?

I know that the general rule is that money in a pension is locked in there until you retire, although you're free to transfer it to another pension.

I really regret having funded my pension so much and would like to get the current transfer value out in cash to manage myself. Considering that the contributions made into it were tax-free, I fully expect that I'd have to take a tax hit when I cash out (if it's even possible) but I'm prepared to accept that. I'd basically be saying I changed my mind and wished I'd not made any contributions into it in the first place.

Is there any way I can do anything with that money that's locked in there, other than transfer it to some other pension? This question is related to my other question I posted about the retirement law changing from 50 to 55, hence my plans getting screwed up somewhat.
«1345

Comments

  • it's not a general rule it's law. the only way to get at it now and then only 25% tfc and an income from the rest is if you were in an employment where the retiement age was far younger ie footballer, jockey etc or you can if you are terminally ill.

    if you merely want better choices of investment speak to an ifa and possibly transfer it to a sipp or a pp with bigger fund choices and free switching between them.
  • Dick_here
    Dick_here Posts: 1,605
    First Post First Anniversary Combo Breaker
    Forumite
    d4005 wrote: »
    I know that the general rule is that money in a pension is locked in there until you retire, although you're free to transfer it to another pension.

    I really regret having funded my pension so much...

    Cue Ed... :rolleyes:
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • d4005
    d4005 Posts: 18 Forumite
    it's not a general rule it's law. the only way to get at it now and then only 25% tfc and an income from the rest is if you were in an employment where the retiement age was far younger ie footballer, jockey etc or you can if you are terminally ill.

    if you merely want better choices of investment speak to an ifa and possibly transfer it to a sipp or a pp with bigger fund choices and free switching between them.
    Thanks for that. So it is as I suspected. That money is locked in there until I'm 55 (13 years away currently, and by the time I get there it might have changed again, talk about a moving target).

    OK, that leads me to two further questions.

    Is there at least a way that when I do reach the minimum age, I can get it all in one 100% lump sum ? Or is it limited to 25%?

    Is there a chart somewhere that shows how much the reduction is on what you can take out based on how many years before the official retirement age you retire? Not sure if that question is clear. What I'm imagining is, if the official retirement age is 65, and you retire at 64, then you get 98% of what you'd get it you waited till 65. At 63 maybe it's 96%, going down year by year, perhaps to the level where at 55 maybe I'd only get 75% for example.
  • Dick_here
    Dick_here Posts: 1,605
    First Post First Anniversary Combo Breaker
    Forumite
    That depends on the rules of the scheme. Taking 5% off per year of early retirement isn't unknown though, e.g. retiring at 55 you'd only get 50% of what you'd get at 65. Of course, when you retire, retirement age will be 66 at least.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • d4005
    d4005 Posts: 18 Forumite
    That depends on the rules of the scheme. Taking 5% off per year of early retirement isn't unknown though, e.g. retiring at 55 you'd only get 50% of what you'd get at 65. Of course, when you retire, retirement age will be 66 at least.
    Thanks. I suppose I need to look around at different pension schemes then, to see which one penalizes the least for early retirement. Perhaps some of them even allow full withdrawal, rather than 25% lump minimum.
  • CLAPTON
    CLAPTON Posts: 41,865
    Combo Breaker First Post
    Forumite
    d4005 wrote: »
    Thanks. I suppose I need to look around at different pension schemes then, to see which one penalizes the least for early retirement. Perhaps some of them even allow full withdrawal, rather than 25% lump minimum.

    none allow 100%, the 25% is maximum the law allows

    its not a penalty to get less because you retire early.
    its simple maths that if you retire early your pension is paid for more years so all pensonal pension schemes will do an acturial reduction for early retirement. 4-5 % per year is normal
  • d4005
    d4005 Posts: 18 Forumite
    CLAPTON wrote: »
    none allow 100%, the 25% is maximum the law allows

    its not a penalty to get less because you retire early.
    its simple maths that if you retire early your pension is paid for more years so all pensonal pension schemes will do an acturial redunction for early retirement. 4-5 % per year is normal
    Thanks. This forum is great. I'm learning so much. I'd have popped into see an IFA, but I'm in Germany and only get back to the UK once a year.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    d4005 wrote: »
    I'm in Germany


    Ah. That makes a big difference...:)

    http://forums.moneysavingexpert.com/showthread.html?t=931111
    Trying to keep it simple...;)
  • I've been thinking about asking Martin to start a new revolution - no doubt with the blessings of his Money Savers - to challenge existing pension withdrawal laws (vis a vis credit crunch, potential stagflation, future inflation). What do you think readers?
  • dunstonh
    dunstonh Posts: 116,027
    Name Dropper First Anniversary Combo Breaker First Post
    Forumite
    flisspops wrote: »
    I've been thinking about asking Martin to start a new revolution - no doubt with the blessings of his Money Savers - to challenge existing pension withdrawal laws (vis a vis credit crunch, potential stagflation, future inflation). What do you think readers?

    The Govt gives tax relief on contributions and tax free growth as well as the pension being outside of the estate for IHT purposes (as well as other protections) to allow people to put money aside for retirement. It isnt there for people to take out early because they want to pay for another holiday in Spain or their short term problems. The taxpayer isnt there to fund mistakes of the individual in their own spending.
    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.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.4K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards