Releasing Cash from Pension Early

dunstonh · 24 March 2011 at 12:53PM

The money that I would get in return is a fee for changing my pension from a LGPS to a private scheme. It is not taking from the capital of the pension.

That is against HMRC rules. Ignoring the fact that the transfer is almost certainly not in your interests (so expect to sign disclaimers to say that you are overruling the adviser etc), it is against HMRC rules to rebate any commissions to you or have fees taken from the pension which are then rebated to you. Those rebates would suffer a 55% tax penalty on them as unauthorised payments.

So,
1 - there has been no law change - so that is a lie.
2 - the transaction is almost certainly going to cost you more than you will benefit.
3 - the refund of commission/fee is against HMRC rules
4 - any adviser recommending the above has to be dodgy as there are going to be rule breaches.

jem16 · 24 March 2011 at 1:41PM

jpmw wrote: »

Stupid I may be but thats what you get for being a former TA in Afghanistan who is stuffed because of a headshot.

I shall answer this as it's obviously directed at me.

I did not say that you are stupid - I said that transferring a final salary pension into a private pension would normally be considered a stupid thing to do. A final salary pension contains no risk and will deliver much more in retirement than a personal pension, with investment risk, will ever hope to achieve. That is why I said that it would be a stupid thing to do.

As to what you are planning to do - it is against the rules and extremely dodgy as others have said.

thenudeone · 24 March 2011 at 2:38PM

You are going to transfer £30k into a new pension fund. Someone is going to pay you 7% of it. And you will still have £30k in the pension fund?
Where is this 7% going to come from if your pension remains intact? Who is going to pay you? How are they going to get it back either straight away or over time, and from who? It all sounds too good to be true, so it almost certainly isn't

If you do manage to get some dodgy firm to pay you money from your pension, and they scarper, it will be YOU that is left having to pay the taxman the penalty for breach of the rules surrounding pensions. Beware.

catlover32 · 24 March 2011 at 9:09PM

Is this one of those pension release firms? I just looked into this briefly the other day. They do claim to be able to release some of your pension but then I looked on this site and couldn't see anything about it so assumes it was a scam.

Loughton_Monkey · 24 March 2011 at 11:12PM

There is no 'legal' way to get any money from your pension until you are 55

If you manage to 'transfer' it to another scheme, then the position about not being able to take any cash from it remains, but in addition, you would lose a huge proportion of its value. In any case, this could not be done in any other way than through an extremely 'dodgy' so-called advisor.

toots1607 · 24 March 2011 at 11:49PM

Hi

I am after a little piece of advice. My other half has a pension with work and we have just noticed that since it was started in 2003 on we only have about 1784 pounds in it what would anyone recommend doing to recover the money he is still working for the same people so he wants to keep it nice.
Thanks again

dunstonh · 25 March 2011 at 1:04AM

what would anyone recommend doing to recover the money

How can you recover something that is not lost?

it was started in 2003 on we only have about 1784 pounds in it

That would be around £20pm then? Best thing to do is get realistic and pay a bit more in to make it something more worthwhile.

toots1607 · 31 March 2011 at 9:26AM

dunstonh wrote: »

How can you recover something that is not lost?

That would be around £20pm then? Best thing to do is get realistic and pay a bit more in to make it something more worthwhile.

Thanks for your not so helpful reply. I dont think that you understood my question .

He has paid into a pension plan £7.01 and his work £8.99 since 2003 and the only amount paid into his "Friends provident" plan according to his statement is £1784.00 so his pension plan should be at £6144.00 a short fall of £4360.00 plus interest.

dunstonh · 31 March 2011 at 9:50AM

He has paid into a pension plan £7.01 and his work £8.99 since 2003

7.01+8.99 = £16. It has been 8 years which is up to around 96 months (depending on what month it started). 96 x 16 = £1536

Thanks for your not so helpful reply.

You have to be aware that the contribution is barely worth the effort. To put it in perspective, many providers how have a minimum contribution of £100pm. In reality, anything less than £100pm gross (unless you are under 25) is doing no real good and it is possible it could be doing more harm.

toots1607 · 31 March 2011 at 9:55AM

dunstonh wrote: »

7.01+8.99 = £16. It has been 8 years which is up to around 96 months (depending on what month it started). 96 x 16 = £1536

You have to be aware that the contribution is barely worth the effort. To put it in perspective, many providers how have a minimum contribution of £100pm. In reality, anything less than £100pm gross (unless you are under 25) is doing no real good and it is possible it could be doing more harm.

Sorry this is a weekly figure. Basically his work has not paid his contribitions into his pension plan.

Releasing Cash from Pension Early

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