Selling/Borrowing from Pension early

24805701

OK, I am 45 and have an occupational pension and have been given 2 lots of feedback, I was told I can transfer into a SIPP and borrow 50% and told the opposite that I can not...if there are such companies out there that do offer to borrow you on your pension, also can you sell outright? do anyone have any success stories or failures..

dunstonh

24805701 wrote: »

OK, I am 45 and have an occupational pension and have been given 2 lots of feedback, I was told I can transfer into a SIPP and borrow 50% and told the opposite that I can not...if there are such companies out there that do offer to borrow you on your pension, also can you sell outright? do anyone have any success stories or failures..

You can borrow up to 50% from the pension for use for the benefit of the pension. However, there are a large number of scams in this area and a load are currently being investigated and shut down.

Those people who do this are expected to have to pay the money borrowed back or end up with a 55% tax charge against the amount paid out. Therefore putting them in debt with HMRC. Those that dont get caught in time are likely to see their remaining 50% in the pension eroded to zero .

Bottom line is that if you are doing it just to get money out of the pension and you are not having your own scheme set up to do it but using one of these pension unlocking companies (most of which are not regulated by the FSA and have overseas companies involved in it somewhere in the process) then expect to be ripped off big time with no consumer protection available.

atush

There may well be better ways to deal with Debt if that is your problem. I'd try the Debt free board?

Loughton_Monkey

If you mean borrow 50% for your own private purposes, then such schemes are unregulated [so you'll not get any compensation], extremely expensive [to the point that virtually all of the rest of your pension will disappear], and are being 'looked at' by the authorities. In short, they are often a rip-off.

If you go ahead, you will almost certainly regret it.

24805701

Thank you for that advice sir, so if I was to set the pension up myself, such as a SIPP, would I then be able to draw on this early, and how would I go about it, would an IFA want to be involved?

24805701

Also how would I know who/what is a scam?

dunstonh

Also how would I know who/what is a scam?

1 - its been promoted as a pension unlock or some method to get money out of your pension (rather than a professional financial promotion regulated under the FSA showing the real reasons you may consider it)

2 - the company doing the promotion is not FSA regulated.

3 - the company doing the promotion are not the ones that do the transaction but pass it through a third party (sometimes even another layer on top of that)

4 - often the company is not based in the UK (or one of the companies in the chain).

Pretty much all or any of those would put you on guard.

the pensions regulator believes the schemes are not legal and has started action against a number.

http://www.moneymarketing.co.uk/pensions/alert-over-pension-loan-schemes/1030883.article

http://citywire.co.uk/new-model-adviser/high-court-freezes-1m-of-pension-loan-scheme-assets/a506346

24805701

So would there be any option that would be regulated to borrow early or no?

atush

I don't know what you need this money for, but whatever it is- even if you could- taking it out of the pension is a bad idea. I have heard of no legal way to do this.

somethingcorporate

It's not a savings account, it is a pension held in trust for your benefit.

You cannot access it (unless you are going to die).

CannySaver_2

Hi

It is important to know what the intended loan is for.

If the loan is for private purposes, such as repaying unsecured debt, then there is no regulated way of getting the money from the pension before the age of 55 when it could be vested and up to 25% of the fund taken as a tax free lump sum.

If however the OP wants a loan for his business, this could be done via a SSAS, albeit with strict rules and regulations and the need for security.

Until we know what the OP want's the money for it is impossible to provide any meaningful answers.

The Canny Saver