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Releasing Cash from Pension Early
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# 1
jpmw
Old 23-03-2011, 5:49 PM
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Default Releasing Cash from Pension Early

Hi,

I'm after a little bit of advice and I know its probably going to be frowned upon but would appreciate any info from any one who knows none the less.

I have a local government pension with a CETV of around 29,000 - (I'm waiting for exact figure from the provider.)

I need to get my hands on some cash fairly urgently and have exhausted all other avenues - I have been advised that I could tranfer into a private pension and release around 7% of the value of the pension - unfortunately that is not enough cash.

I am 40 years old, a full time mature student - so I am not paying into the scheme any longer and I will not be returning to a local governmen position so I'm happy with moving it to an private scheme despite having to retire a little later.

Does anyone know how I could release slightly more from the pension - Ideally im looking to release around 5,000 to 7,000.

Any help woiuld be greatfully recieved.

Thank You

JPMW
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# 2
jem16
Old 23-03-2011, 6:11 PM
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Quote:
Originally Posted by jpmw View Post
I have been advised that I could tranfer into a private pension and release around 7% of the value of the pension
Advised by whom?

You cannot get access to any pension scheme before age 55.

Transferring your LGPS to a personal pension would require signing off by an IFA and would normally be considered a very stupid thing to do.
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# 3
jpmw
Old 23-03-2011, 7:39 PM
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I have been advised by an IFA who states that you can get access to a pension before the age of 55, and I have double checked this and it is correct unless new came into law today. I would prefer if anyone who knows anything about this to reply if possible, my personal circumstances dictate that is the only option I have and what may be stupid for someone else is not for me.

Thanks for replying anyway.
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# 4
dunstonh
Old 23-03-2011, 7:46 PM
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I have double checked this and it is correct unless new came into law today.
What law is this?

Quote:
I have been advised by an IFA
A real one or an overseas based firm using the IFA title to try and hoodwink you?
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 5
jem16
Old 23-03-2011, 7:49 PM
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Quote:
Originally Posted by jpmw View Post
I have been advised by an IFA who states that you can get access to a pension before the age of 55, and I have double checked this and it is correct unless new came into law today.
From April 2010 you cannot access a pension until age 55 except under very specific circumstances such as ill health or death.

Some occupational pensions have a special preserved pension age which is earlier than age 55 but the LGPS is not one of them.

Perhaps you can specifiy what the IFA said?

Quote:
I would prefer if anyone who knows anything about this to reply if possible, my personal circumstances dictate that is the only option I have and what may be stupid for someone else is not for me.

Thanks for replying anyway.
Your personal circumstances may well dictate that it it is not a stupid option for you but it doesn't really matter as it cannot be done anyway.
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# 6
jpmw
Old 23-03-2011, 10:25 PM
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Thanks for the replies, I guess Ill just have to go whith what I believe I have been offered, my chance and Im happy to take it.
Thank You all again for the semi judgemental advice.
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# 7
CAE
Old 23-03-2011, 10:45 PM
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If you have been advised by an IFA, and you have double checked this and think it is correct, then I'm not sure why you are asking a question on this forum. You have been told that it is not possible to access any pension until age 55, but are choosing to ignore this.
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# 8
dunstonh
Old 24-03-2011, 1:28 AM
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Quote:
Originally Posted by jpmw View Post
Thanks for the replies, I guess Ill just have to go whith what I believe I have been offered, my chance and Im happy to take it.
Thank You all again for the semi judgemental advice.
Are you telling porkies by any chance to wind people up?

If not, then there are scam companies out there who will tell you they can do it. There has been no law change today. That alone should put you on guard. The fact the FSA issue warnings on their website about this sort of thing should put you on guard to.

Still, its your money to waste. You can ignore the warnings.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 9
SandC
Old 24-03-2011, 9:21 AM
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I'm with the others, you cannot access pension funds until at least aged 55, and even then it can only be a lump sum of 25% of the value.

Listen to the guys on here, they are not being judgemental, they know what they are talking about.

If you pursue this you are likely to lose money, not gain any. Run for the hills if anyone asks you for any fee or money for this in advance. I am 99% sure that they will.
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# 10
jpmw
Old 24-03-2011, 10:44 AM
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Perhaps my wording in a previous post is wrong, I am not into this sort of financial matter hence why I posted on here to ask for further information. 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.

And no I am not winding people up - I did as for info and advice but to be honest did not want the attitude or or name calling that happens on this site, which is why I tried to highlight in my first post. Stupid I may be but thats what you get for being a former TA in Afghanistan who is stuffed because of a headshot.

Anyway - thanks again guys.
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# 11
SandC
Old 24-03-2011, 11:02 AM
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Sounds very dodgy, sorry.

What harm would it do to get a second opinion from another IFA if you don't agree with what's being said on here?

You are now saying you've been told you can get 7% of the value of your pension fund and still keep the 29,000 pot intact? Yet in your first post you infer that you will indeed be looking at releasing some of the funds - so which is it? Not that either are possible.

Last edited by SandC; 24-03-2011 at 11:05 AM.
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# 12
dunstonh
Old 24-03-2011, 11:53 AM
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Quote:
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.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 13
jem16
Old 24-03-2011, 12:41 PM
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Quote:
Originally Posted by jpmw View Post
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.
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# 14
thenudeone
Old 24-03-2011, 1:38 PM
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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.
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# 15
catlover32
Old 24-03-2011, 8:09 PM
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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.
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# 16
Loughton Monkey
Old 24-03-2011, 10:12 PM
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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.
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# 17
toots1607
Old 24-03-2011, 10:49 PM
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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
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# 18
dunstonh
Old 25-03-2011, 12:04 AM
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Quote:
what would anyone recommend doing to recover the money
How can you recover something that is not lost?
Quote:
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.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 19
toots1607
Old 31-03-2011, 9:26 AM
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Quote:
Originally Posted by dunstonh View Post
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.
Debt Free No. 403

DFD:- Long way to go but going down at last.
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# 20
dunstonh
Old 31-03-2011, 9:50 AM
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Quote:
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

Quote:
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.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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