Releasing money early from my Scottish Widows pension?

dizzylady15

Hi,

I am 30 and have been putting into a company Scottish widows pension plan for a good few years now. Even so there's not a lot in there (ie, under £10k) and I have now left the company.

Rather than continuing to contribute to this pension scheme - I would like to release the money and invest in property. I have spoken to Scottish windows who say I can transfer the money to any other pension plan, but they cannot release the funds. Perhaps i'm being very ignorant but it seems wrong that I can't release and use my money as I would like to.

I'm assuming that, as with most things, there are ways around this - can anyone help?

CLAPTON

it's a pension and you can release 25% of the money when you are 55

dizzylady15

No way I can release anything earlier at all? Or even move it to another provider who would let me release it ?

ColinJS

Hi
Hopefully I can help.
As you are 30, the first thing you need to be aware is that you cannot take cash out of the pension fund itself. So you cannot simply take cash out and use this as a deposit for property, The earliest you can withdraw (under current legislation) is age 55 (and even then you may only draw 1/4 as a tax free lump sum, the remaining fund has to provide an income which is taxable and subject to maximum annual limits). This is the rule for any pension provider.

Scottish Widows are correct, you could transfer the plan to an alternative pension scheme. However, given there is "not a lot in there" the costs of transferring (unless you DIY) are likely to be disproportionate to any small advantage which might be gained. But, transferring will not allow you to invest directly in residential property (you can invest directly in commercial property through a SIPP but your fund just isn't big enough to justify the cost of a SIPP yet). Realistically the only way you will obtain exposure to property investment is to invest in Scottish Widows Property fund or an externally managed property fund in Scottish Widows' range (commercial property only).

Sorry, probably not the news you wanted to hear. But bearing in mind you received valuable tax relief when you invested the money, the trade off is lack of access to capital.

Paul_Herring

dizzylady15 wrote: »

Rather than continuing to contribute to this pension scheme - I would like to release the money and invest in property.

The closest you'll be able to get is find a fund that invests in property.

I have spoken to Scottish windows who say I can transfer the money to any other pension plan, but they cannot release the funds. Perhaps i'm being very ignorant but it seems wrong that I can't release and use my money as I would like to.

Its a pension fund, not a savings account. Unless you're going to die in the next 12 months, you'll have to wait until (currently) 55 before you can do anything other than transfer the fund to another pension fund.

Cook_County

Yo could transfer it to a QROPS, leave the UK and in just over 5 years time the QROPS might give you access or a loan ...

Cautious_Investor_3

Cook_County wrote: »

Yo could transfer it to a QROPS, leave the UK and in just over 5 years time the QROPS might give you access or a loan ...

Hmmmm, she has a £10k fund, most QROPS will charge that in fees!

bendix

Plus ca change, plus c'est la meme chose.