Getting money out of pension

MarkGalvin

I have an executive pension plan for an old company that I used to own.

This money is just sitting in the plan and I am experiencing severe financial difficulties so I could really do with accessing the money right now.

The value of the fund is about £25,000. I am 39 now and the retirment date on the plan is 60.

Is there anyway of using this pension to pay off my exisitng debts today?

Thanks

Mark

Charlton_Taz

In short...No Unfortunately.

The government ensure that by law you can't take money out of a pension before retirement because otherwise it would be too tempting for everyone to do just that. The encouragement to save into pensions in the first place is the tax relief, with the downside being its locked away until you retire.

Sorry I couldn't have been more help.

peterbaker

Charlton_Taz wrote:

...The encouragement to save into pensions in the first place is the tax relief, with the downside being its locked away until you retire.

You forgot to mention the principal downside, CT - that pension contributions over the past 15 years have been drizzled away by the guardians of the schemes in all their guises which (again in most cases) has completely obviated the advantage of tax relief and far worse.

I wouldn't touch an insurance-backed pension scheme with a bargepole unless I was trying to extricate the remains.

MarkGalvin

Thanks for your views. Shame though - could have done with the money.

Just reinforces my opinion of how crap a pension really is.

Thanks

Mark

Pal

While it doesn't help you now, you might be grateful for the pension when you eventually retire. The problem is not the pension so much as your change in financial circumstances. Pensions are designed to give people good tax advantages if they are willing to lock their money away until they retire, but they can be inflexible if people's circumstances change.

In some ways this is understandable. In Australia in the 1990s individuals were allowed to withdraw their pension pots if they claimed "financial hardship", however many of the cases I saw involved people withdrawing pension savings for trivial reasons. I even had one person withdraw their pension savings because he claimed he was struggling to pay off a loan he had taken out a month ago to buy a new music system for his car!

As a result the rules on withdrawing pensions early are now pretty inflexible.

zcaprd7

Still, it is your money, you should be able to pull it out minus tax if you want it?

Sorry off topic/discussion alert!

dunstonh

Just reinforces my opinion of how crap a pension really is.

Yeah. Fancy having a product designed for retirement not allowing you to take out money to pay for a holiday or some designer clothes when you are aged 28.

zcaprd7

Yeah, fancy having a a product that nobody bothers with...

Pal

Indeed. Fancy having a nation full of people who are living in poverty in retirement..

MarkGalvin

I still have 25 years working to provide an income for my family. I need the money now and if it allows me to hang on to my house then it is not a trivial matter.

Life changes and pensions don't understand that. It is a fixed and inflexible product and not suited to life as it is nowadays.

dunstonh

MarkGalvin wrote:

I still have 25 years working to provide an income for my family. I need the money now and if it allows me to hang on to my house then it is not a trivial matter.

Life changes and pensions don't understand that. It is a fixed and inflexible product and not suited to life as it is nowadays.

What are going to do when pension compulsion comes in then?

That is back on table again and is possible to arrive sooner rather than later. Australia has it already and we have a recent trend of following them with financial services products.

The product is inflexible at this time due to the tax relief. The Govt isnt going to give tax relief on something you can draw out next week. You can potentially get upto 72% tax relief by making pension contributions. Thats not bad for a product your consider unsuitable.

At the end of the day, forget pension, think retirement planning. If you are not putting approx 10% of your income away for your retirement, it is only going to be you that loses out. Whether you chose pension, ISA or some other means is irrelevent really at this stage.

Perhaps the bigger issue is that people who only think about now, have over committed themselves with borrowing and cannot afford to think about later. That doesnt make the pension product bad. Its the mentality of the general public and the ability to borrow more than they should that is bad. That isnt going to be an easy fix though.