Can I cash in my pension?

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  • dunstonh
    dunstonh Posts: 115,907
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    For those who are thinking of doing pension loans, please read this thread:

    http://forums.moneysavingexpert.com/showthread.php?t=4304609
    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.
  • my wife worked fr a few years for local councel and paid into pension scheme. Its value isvery small and certainly less than £18000. She requested if she could receive the pensio as a one off lump sum and was informed she could not!!! is this correct?
  • mania112
    mania112 Posts: 1,981
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    my wife worked fr a few years for local councel and paid into pension scheme. Its value isvery small and certainly less than £18000. She requested if she could receive the pensio as a one off lump sum and was informed she could not!!! is this correct?

    You are only allowed to take advantage of triviality payments from these types of schemes if the schemes rules actually allow it, they may not. If the rules don’t allow Triviality it may be possible to transfer that pension to an arrangement that will.
  • dunstonh
    dunstonh Posts: 115,907
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    my wife worked fr a few years for local councel and paid into pension scheme. Its value isvery small and certainly less than £18000. She requested if she could receive the pensio as a one off lump sum and was informed she could not!!! is this correct?

    Is this the only pension she had? Was she aged 60 or over? The LGPS woudlnt be expressed as a value like that as it is not a money purchase scheme but defined benefit. So, where did she get this less than £18k figure from?
    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.
  • It is worth highlighting the latest structure which is being promoted via a number of websites.

    Stage 1 is that the firms behind the structure encourage you to move your pension(s) to a SIPP which has access to execution-only stockbrokers.

    Stage 2 is that you are told to invest all of your pension in a company listed on one of those stock exchanges. A company listed on the Frankfurt Stock Exchange is typically used, though this isn't the only Stock Exchange being used.

    Stage 3 is that, in return for investing all of your pension in this company, you are personally sent half of the value of the investment by the company promoting the structure.

    You are told that you must not sell the shares for 5 years so that the company has the chance to use your funds to grow.

    The reality is more likely to be that the shares are in fact worthless with the price you have paid in your SIPP being manipulated to appear as though it is the true market value.

    You have paid 100% of the value of your pension for an investment which is possibly worth nothing and the people who have sold you the investment give you (up to) half of what you have paid as a "thanks". You only find out that the share you purchased is worthless five years down the line.

    You are very likely to find that HMRC pursue you for a tax charge of more than 50% of the amount you were paid, because you have released funds from your pension that you weren't allowed to.

    Be very careful.
  • mania112
    mania112 Posts: 1,981
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    ^^ Presumably it's the brokers themselves that are promoting this and making the 'sales' calls?

    We had a client recently that showed interest in a Carbon Credit investment (we could only find one provider that allowed for that specific broker the client was interested in).

    Turned out that the broker was offering 'rebates' for signing up.

    EDIT: Should be mentioned the SIPP provider cancelled the Firm X Carbon Credit investment from their offering.
  • mania112 wrote: »
    ^^ Presumably it's the brokers themselves that are promoting this and making the 'sales' calls?

    We had a client recently that showed interest in a Carbon Credit investment (we could only find one provider that allowed for that specific broker the client was interested in).

    Turned out that the broker was offering 'rebates' for signing up.

    EDIT: Should be mentioned the SIPP provider cancelled the Firm X Carbon Credit investment from their offering.

    Not the stockbrokers no, it is the people behind the websites doing the promotion. Brokers and SIPP providers are now becoming more aware of the structure and looking out for patterns of clients all investing their whole pension fund in particular shares and banning them. I could name a fair number of the specific shares which are involved in this but would probably be threatened with legal action if I did, so won't.
  • mania112
    mania112 Posts: 1,981
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    Indeed. It beggars belief how many clients are duped into these 'crackpot' schemes.
  • Many thanks for this information - put in layman's terms, however, i have a question. I am unable to pay into my pension (opted out of serps '86) and am watching it disappear every year (it's now only £4000) and probably won't have any left by the time I'm 55. What can I do?
  • dunstonh
    dunstonh Posts: 115,907
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    i have a question. I am unable to pay into my pension (opted out of serps '86) and am watching it disappear every year (it's now only £4000) and probably won't have any left by the time I'm 55. What can I do?

    It doesnt go down every year. It will go up and down with investment returns with the aim of long term growth. It just zig zags on its way. If it has been going down every year then there is something wrong.

    How is it invested?
    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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