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Can i cash in my pension?
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# 1
curlyfairy
Old 11-06-2008, 10:15 PM
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Smile Can i cash in my pension?

Hi all,wonder if someone can advise me please.I have a pension with Norwich union but stopped paying into it in a couple of years ago.It is just under 9,500 and wondered if i can cash it in.I cant see anyway i can afford to pay anything into it at the moment.
Thanks in advance.

Ben.
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# 2
dunstonh
Old 11-06-2008, 10:32 PM
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Nope. You cannot cash it in. Only if over 60 and all your pensions are less than 1% of the lifetime allowance can you access it as a lump sum (and then subject to a tax penalty. If over 50 (55 from 2010) you can get access to 25% although that also has consequences.
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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# 3
EdInvestor
Old 11-06-2008, 10:37 PM
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Amazing how many people seem to have been sold private pensions without being told they could not cash them in.
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# 4
curlyfairy
Old 11-06-2008, 11:09 PM
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Amazing,all that money sitting there and i need it but cant touch it,typical.Thanks for the replies.

Ben.
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# 5
Dithering Dad
Old 12-06-2008, 9:02 AM
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Amazing that people want to cash in their retirement savings and leave themselves on the poverty line when they're elderly.

Brilliant that the pension rules prevents this happening until they're at least old enough to understand the repercussions.

Last edited by Dithering Dad; 12-06-2008 at 9:29 AM.
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# 6
lisyloo
Old 12-06-2008, 9:24 AM
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Quote:
Amazing,all that money sitting there and i need it but cant touch it,typical.
Hi Ben,

When you put money in a pension you get great tax relief from the government.
Part of the "deal" is that this money is ring-fenced to look after you in old age.

I'm sorry if you didn't understand that, but the only circumstances the money can be released are death and retirement (or at lesat reaching the specified age).
There is also another clause if you are terminally ill but I don't think that applies here.
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# 7
jonathon_hart
Old 12-06-2008, 9:56 AM
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Quote:
Originally Posted by EdInvestor View Post
Amazing how many people seem to have been sold private pensions without being told they could not cash them in.
No its a general problem we used to get asked that at least once a fortnight if not weekly administering an occupational DC scheme. Maybe we ought to put a sticky at the top of the forum?
I have worked for 5 years as a Pension Administrator and then a further year in a non-administrator pension role. I am not (and never have been) an adviser. Do not take anything I say as advice, it is information given on the best of my knowledge.
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# 8
Dick here
Old 12-06-2008, 10:35 AM
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This thread is amazing.
Don't trust Mighty Deals !
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# 9
dunstonh
Old 12-06-2008, 11:06 AM
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The bit about selecting your retirement age (typically 65), it being called a pension (how much bigger a clue do you need) and the risk warnings in the documentation 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.
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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# 10
Pobby
Old 12-06-2008, 12:22 PM
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But I can understand the frustration all that can bring. I was in a tight spot some years ago, needing to pay my suppliers, just one of the seven pots my wife and I have would have helped out greatly. Mind you, glad I didn`t!!!!
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# 11
Dithering Dad
Old 12-06-2008, 12:58 PM
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Quote:
Originally Posted by Dick here View Post
This thread is amazing.
No. You're amazing.
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# 12
lisyloo
Old 12-06-2008, 1:03 PM
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Quote:
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.
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# 13
EdInvestor
Old 12-06-2008, 1:26 PM
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Quote:
Originally Posted by lisyloo View Post
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).


Quote:
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.
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# 14
Dick here
Old 12-06-2008, 2:41 PM
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Quote:
Originally Posted by Dithering Dad View Post
No. You're amazing.
Thanks dad
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# 15
Dick here
Old 12-06-2008, 2:44 PM
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Quote:
Originally Posted by EdInvestor View Post
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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# 16
lisyloo
Old 12-06-2008, 2:54 PM
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Quote:
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.

Quote:
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.
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# 17
dunstonh
Old 12-06-2008, 4:09 PM
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Quote:
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.

Quote:
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 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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# 18
EdInvestor
Old 12-06-2008, 6:43 PM
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Quote:
Originally Posted by lisyloo View Post
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.

Quote:
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.

Quote:
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.
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# 19
purch
Old 12-06-2008, 7:51 PM
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Quote:
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

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.'
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# 20
curlyfairy
Old 13-06-2008, 5:44 PM
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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.
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