Cashing small pension in early due to financial difficulties - can it be done?

AHK

Hi MoneySavers!

Just a question about cashing in a pension early. I'm 30 and don't have a pension except for a small one (in terms of contributions and size) which I don't use.

I've run into serious financial difficulties and need to know if I can cash in my pension that I have with Friends Provident. I didn't pay much in and it has laid dormant for the last few years.

From the Yearly statement I received earlier this month it shows the total value of my plan as £1,663.65. Am I entitled to receive this amount now? And what would the tax implications be, if any?

I've contacted Friends Provident who have yet to get back to me. The scheme is a 'New Generation Personal Pension Plan'.

Thanks!
AHK

Paul_Herring

AHK wrote: »

I'm 30 [...]

I've run into serious financial difficulties and need to know if I can cash in my pension that I have with Friends Provident.

Unless you're diagnosed as terminally ill, you won't be able to get any of your pension fund before you're at least 55.

McKneff

Its a pension for your retirement, not a savings account.

It has to stay there till you are at least 55 under present legislation.

bendix

I'm in a very good mood today. No really, I am.

dunstonh

I was going to say that we havent had one for about a week and didnt expect one this week with the news headlines yesterday confirming that the Govt is not allowing early access to pensions.

I guess the thread a few below this one (at time of posting) saying that early access will not be allowed and the news yesterday confirming it just pass people by.

Not a dig at the op but it has to be a concern for 30-40 years time when we see so many people with little or nothing in a pension by age 30. They are going to be in for one hell of a culture shock when they get there. The gap between the haves and the have nots is just going to get bigger.

Paul_Herring

Never mind DH - I'm sure pension credit et alia will still be around then....

Loughton_Monkey

AHK wrote: »

From the Yearly statement I received earlier this month it shows the total value of my plan as £1,663.65. Am I entitled to receive this amount now? And what would the tax implications be, if any?

No you are not entitled to it until age 55. So there are no tax implications.

If, at age 30, you have noticed that you have hardly any retirement savings, why are you not thinking of the best way to increase that amount rather than decrease it?

Not saving for retirement is 'financial suicide'. When you are over 50, and in the same position, you are 'financially terminally ill' because nothing can change it much. But at age 30, you still have the opportunity to correct things. If you don't, I guarantee you will regret it.

Loughton_Monkey

bendix wrote: »

I'm in a very good mood today. No really, I am.

Got a good price on selling one of your pensions, I guess.

jh2009

In defence of people who post the "can i cash my pension in" question I think its an understandable question for someone with financial trouble. Many of these people aren't clued up on pensions. If you have debt or financial problems, and find a pension statement quoting a fund value its a valid question asking if they can cash it.

Of course the "pension" name should give a clue that the funds are for long term retirement provision. I think the problem is not people posting the same question, but that there isn't a "can i cash my pension in" thread stuck at the top of the board that would cut down this question being repeatedly asked.

Paul_Herring

jh2009 wrote: »

I think the problem is not people posting the same question, but that there isn't a "can i cash my pension in" thread stuck at the top of the board that would cut down this question being repeatedly asked.

I think that's being just a little too optimistic....

AHK

Many thanks, all, for your informative responses. I had seen similar questions posted on the board earlier but wasn't so sure that the response would apply to small amount I have in the scheme, that's why I posted the amount here, and also because I'd read somewhere that if the total in a scheme was less than £18,000 or 1% of £1.8m then there wouldn't be a problem cashing it in, though I accept this may be wrong.

@jh2009 - absolutley. the hope of a possibility of gaining access to a pension pot does seem appealling to those in financial difficulties and I guess is why my sort of question is posed in these forums repeatedly as you say.

I do hope, once I'm out of the financial mess I'm in, to contribute to my pension, and my employer does offer a scheme but because I need the cash now I don't contribute, so perhaps in 6 months time I'll start contributing again (or restart the Friends Provident one I currently have).

FYI the fund I currently have would entitle me to a yearly taxable pension of only £235!

Thanks again,
AHK