Pension switching - is it possible???

wit40iwtwan

Hi all

My question is quite a long shot but is it possible to switch a pension I have with Standard Life that I no longer contribute to (it was one from my last job so now contributing to one in my new job) and use the funds to pay for the required deposit to get onto the property ladder?

I can certainly afford a mortgage at the moment but I know it will take at least 3 years to save the required deposit. I have about £20K sitting in this pension and I am just wondering if I can convert it to pay for the deposit and have the house as a sort of pension - if this makes sense.

I welcome any advise in this area.

dunstonh

My question is quite a long shot but is it possible to switch a pension I have with Standard Life that I no longer contribute to (it was one from my last job so now contributing to one in my new job) and use the funds to pay for the required deposit to get onto the property ladder?

No it isnt. Pensions are for retirement. Not for spending as you wish before then.

The Govt doesnt give tax relief, tax free growth and benefits to the employer just to allow people to spend it before they get to retirement I'm afraid.

wit40iwtwan

dunstonh wrote: »

No it isnt. Pensions are for retirement. Not for spending as you wish before then.

The Govt doesnt give tax relief, tax free growth and benefits to the employer just to allow people to spend it before they get to retirement I'm afraid.

Thank you for the reply - I was actually hoping to use my current pension to fund the deposit and would have used the growth in the property for future pension needs... I know some people buy property instead of a pension so it was a simple question to try to get onto the property ladder... hey ho back to saving I go - hopefully the banks will reduce their need for larger deposits or the price of property will remain low for 3 years till I have enough saved!

dunstonh

I was actually hoping to use my current pension to fund the deposit and would have used the growth in the property for future pension needs...

Property doesnt make a good retirement income unless you have many properties. Typically 8 or more.

I know some people buy property instead of a pension so it was a simple question to try to get onto the property ladder

A lot of these people dont realise that its not a good option. The experienced landlord investors may well do but most of the newbie landlords over the last few years do not.

By the time you repay the mortgage at the end (which for many means having to sell the property as they have left themselves to highly geared) then pay the capital gains tax, what is left over is actually quite a small amount.

hopefully the banks will reduce their need for larger deposits or the price of property will remain low for 3 years till I have enough saved!

Deposits are unlikely to return to 5% in the short term. 10% is the best you can hope for whilst house prices are falling. Once house prices bottom out, you may see 5% deposits return.

At the moment, you are on to a winner by not buying. Let the house prices drop another 20% whilst you wait it out and save more for your deposit. The last house price crash saw prices start to drop in 1989 (although it did rise slightly again over the next year before really starting to fall in 1990 onwards) and reached the bottom in 1995. Whilst past performance is no guide to future returns, we are only 18 months into this house price drop. Its early days yet.

wit40iwtwan

Thank you again... I will put my faith in savings... secured a fixed saving rate of 10% with HSBC provided I keep saving for 12 months... and I have taken out the share save option at work... fingers crossed in 3 years I can realise some funds towards at least a 10% deposit!

It is frustrating though knowing I am paying so much in rent which I know could service a mortgage! grrr... but I will wait.

Myrmidon_J

wit40iwtwan wrote: »

My question is quite a long shot but is it possible to switch a pension I have with Standard Life that I no longer contribute to (it was one from my last job so now contributing to one in my new job) and use the funds to pay for the required deposit to get onto the property ladder?

If you are of retirement age, it is possible to use your PCLS (or tax-free cash: up to 25% of the total transfer value, I think) for a property purchase. Or, indeed, anything else!

But it is quite unusual to start on the property ladder at such a late age! (The most common instance, in my experience, is in divorce cases where a pension fund has formed part of a settlement and one partner needs to find somewhere to live.)

Start saving and good luck in reaching your deposit target!