Can I cash in my pension?

atush

If you are finding it hard to pay your way, you need to reduce spending and or increase income.

Go to the debt free board and post an SOA and ask for advice. teh clever folks there will help you trim your spending down. Taking in a lodger might help for a start.

Gettingeven

dunstonh wrote: »

Lets say the decision costs you an average of £8000 a year in lost income. If you live 25 years then you have lost £200,000.

Hi, I've been thinking about what you wrote above.

If I accept that what you say is true, I would lose all that taxable income should I live until I'm 90. However, shouldn't one also take into account that I would be saving £500 per month in expenditure now, when it's most needed? This would happen because I would repay all my loan committments. I would be mortgage and credit card free, without actually touching that part of the pension fund transferred into a SIPP to be used for pension, which could continue to grow until I used it for drawdown, or to purchase an annuity, when I finally retire?

I would think that there are a lot of people whose lives aren't quite as simple as is sometimes made out on here. Life isn't black and white, it's complicated for lots of people. If you offered these people the option of being completely debt free and worry free, with all their income still available for the next 10/11 years before they fully retire, I'm sure alot of them would take it. Suppose my transfer value is, say, £180,000. I could transfer that to a SIPP, take the £45,000 cash at 55, repay all my loans, and still have the remaining £135,000 invested for a further 10 years. In addition to this, my existing company pension scheme will receive £500 per month into it for the next 11 years (increasing each year, and started 18 months ago).

Personally, I'm not that concerned about income when I'm 80, or 90. I need it now. To live. I suspect my position is not uncommon, and I think that sometimes we have to make hard choices. As long as the consequences are clear, then what's the problem? A friend of mine had obtained a transfer value from his final salary scheme 3 years ago and it has since risen from £120,000 to £186,000 because of the falling gilt yields. This is very tempting. When yields start to rise, transfer values will fall, and I could miss the boat, so to speak.

Anyway, I haven't obtained the transfer value yet. I'll let you know what it is in the next couple of weeks.

Gettingeven

atush wrote: »

If you are finding it hard to pay your way, you need to reduce spending and or increase income.

Go to the debt free board and post an SOA and ask for advice. teh clever folks there will help you trim your spending down. Taking in a lodger might help for a start.

Hi,

My youngest son is about to move into the only vacant bedroom in my house, but he's out of work! If I could charge him rent then that might be a good idea, lol!

atush

take part of his JSA

Gettingeven

atush wrote: »

take part of his JSA

Hah! No, don't think so.

It's very easy to say cut this or increase your income. Harder to actually do it. I don't want to get an extra job, just so I would get a higher pension in 10 years time! This is, to coin a phrase, not a rehearsal. We only get one life, unless you're a buddhist. Or Jesus....etc. I'm not working every hour of the day just so I can enjoy myself when I'm completely knackered at 65, if I make it that far!

Scape_Goat

Hi I'm just wondering if anybody can give me some advise please. I have a company pension and have recently been offered an incentive to opt out and go with another company. I was wondering what is the meaning of ill health? Do you actually have to be dying to cash it in? Which I am so sorry for anyone that is in that situation, or can you cash it in just for the fact you are ill and are unable to work ever again?

atush

Not necessarily, some pension allow retiring early due to ill heath but include actuarial reductions so you would get a very much reduced pension.

what do you mean you have been offered a chance to opt out? What type of pension (ie defined benefit/FS or defined contribution/money purchace? New job or just moving pension?

atush

Gettingeven wrote: »

Hah! No, don't think so.

It's very easy to say cut this or increase your income. Harder to actually do it. I don't want to get an extra job, just so I would get a higher pension in 10 years time! This is, to coin a phrase, not a rehearsal. We only get one life, unless you're a buddhist. Or Jesus....etc. I'm not working every hour of the day just so I can enjoy myself when I'm completely knackered at 65, if I make it that far!

An d why not ask him to pay some of his way? My son is graduating Uni and will be paying me weekly for room and board- somehting I did with my parents almost 30 years ago when I graduated? Taking him in means you can't let a room, which was your easiest way to mroe money.

So, as I said, if you don't want to rent a room, or get an extra job you will have to cut your outgoings. And that means NOT raising your grocery bill feeding another mouth- JSA is for living expenses whil looking for work- one of which is food.

jamesd

Incentives to opt out are almost always a bad idea. Do not do it unless you have a medical condition that significantly reduces your life expectancy - smoking, obesity, heart or circulatory disease, diabetes are some examples. If anything like that applies then you'd need to consult an IFA from unbiased.co.uk or personal recommendation to help you to decide. Don't use the company IFA if one is offered, there's an inevitable incentive for the company IFA to maximise the number of people accepting the deal.

Companies offer these deals to decrease their future pension payout liabilities. That saving is coming from the employees who accept the offer. But it can make sense for an employee who has reason to believe that they will die much earlier than the scheme average.

Gettingeven

atush wrote: »

So, as I said, if you don't want to rent a room, or get an extra job you will have to cut your outgoings. QUOTE]

And yet, you still disagree that the third option is a good one - ie. take my transfer value, take the tax-free cash, pay off all my loans, and leave the remaining fund invested in a SIPP until I retire at 65/66.

Instead of reading the predictable replies, I would rather hear from people who did what I wish I could do.