Pension opt out

williams_mum

We are feeling the credit crunch at the moment along with everyone else. We are both freelance and we are currently unemployed with no work it would seem until April/May. Obviously we do have savings but they are getting low and we are currently looking for work outside our fields. I have a pension worth around £13k and wondered if I could sell it somehow. It is with the standard life and obviously they won't let me cash it in. Does anyone have any suggestions please.

MikeJones_2

Hi williams mum,

The simple answer to your question is 'no' - you cannot sell your pension.

The earliest age you can draw benefits from a registered pension scheme is 50 (with a few minor exceptions) until 6th April 2010 whereupon the minimum age increases to 55. Whether you can draw benefits 'early' will depend upon (a) the type of pension you have, (b) the policy conditions or (c) the Scheme Rules.

Persons aged 60 or over with a total pensions pot of less than £16,500 for 2008/09 (less than 1% of the Lifetime Allowance) can take the pension as a lump sum under 'triviality rules'.

Sorry to hear of your predicament.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

dunstonh

I have a pension worth around £13k and wondered if I could sell it somehow.

A pension of that size would suggest you are only in your 20s (unless you planning has been rather poor!). Even if you could sell it, which you cant, you would only be putting off your problems until later. A basic state pension of £4700 a year isnt a lot of fun to live on. So, robbing peter to pay paul only gets you so far.

williams_mum

Hi, Thanks for the advice. However, my Father put a decent amount into a private pension and they took the amount off his state pension, so he is no better off and because he has a private pension does not get any benefits, so our money is in property.

chesky369

... they took the amount off his state pension...

no, that can't happen. The state pension is a fixed amount granted to everyone who has paid the correct amount of contributions. You get it even if you are a millionnaire.

seven-day-weekend

williams_mum wrote: »

Hi, Thanks for the advice. However, my Father put a decent amount into a private pension and they took the amount off his state pension, so he is no better off and because he has a private pension does not get any benefits, so our money is in property.

It will not have come off the basic State Pension. It may mean he has not got as much SERPS (Second State Pension) if he was opted out. However his private pension should be the same or more than if he had stayed in SERPS.

Your property income/capital will be counted for means-tested benefits purposes.

dunstonh

williams_mum wrote: »

Hi, Thanks for the advice. However, my Father put a decent amount into a private pension and they took the amount off his state pension, so he is no better off and because he has a private pension does not get any benefits, so our money is in property.

As others have said, you are incorrect in your assumption. The only way your state pension can be reduced is if you contract out. That isnt planning for retirement. That is effectively just changing the state from paying the pension to the pension provider paying it. i.e. do you want the state to pay £30pw or the pension provider to pay £30pw.

Its your ordinary rights/non protected rights (From your own personal contributions) that make the difference. Not the protected rights (from contracting out).

Good luck with the property. Unless you have around 8 properties dont expect it to work and dont expect any benefits as they are included in the means test as well.