Can I cash in my pension?

mystic_trev

2210tim wrote: »

Hi, i have a company that is listed on a recognised stockmarket, we franchise out our business throughout the UK. In the past we have had franchisees use their pensions to buy franchises (they take it out of its current pension plan and into a SIPP, Self Invested Pension Plan). We have realised that a lot of people dont want a franchise but would like to cash in their pensions as they dont want to wait till theyre 60/65 to receive £40 a week (which will buy nothing in 20 years time) so what we are doing is allowing people to invest in our company and we give them back 50% in cash. 28% is capital gains tax, 2% is broker fees and 20% is for my company. So if your pension was worth £50k, we would give you £25k now, you could invest this in a 4.5% cash isa now and in 15 years time it would be worth £49k, this would be a lump sum for you to spend how you like. Not £50 a week. A pension is worked out by dividing your pot by 20/25 years which gives you a weekly sum from the age of 60 or 65, a £50k pension would give you £50 a week. I think id rather have the £25k now to invest how i want now and not in years to come. Let me know if you want to know more and you're welcome to visit us in the North West (St Helens) or we can come to you ? Kind regards Tim, ps, we are inserting a classified ad in the Daily Express and Mirror in a couple of weeks and our website should be up and running soon live-for-today-co.uk

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david6508

Hi everyone i am newbie here i hope you will be fine , Thanks for the information but I have more question that you may know the answer to as your knowledge. If i leave a pension and its deferred until under 60, can the rules be changed after its deferred? Specifically can the differed benefit age be raised up to 80 ??????? i will wait your reply

Zelazny

david6508 wrote: »

Hi everyone i am newbie here i hope you will be fine , Thanks for the information but I have more question that you may know the answer to as your knowledge. If i leave a pension and its deferred until under 60, can the rules be changed after its deferred? Specifically can the differed benefit age be raised up to 80 ??????? i will wait your reply

Generally the rules that apply are the rules that were in force when you left the scheme - i.e. when the benefit became deferred.

They can't just change your benefits retroactively, otherwise no pension schemes would have gone bust - they'd just have changed the rules so they don't have to pay anything...

RingtheChanges

jamesd wrote: »

Whether this makes sense depends on what you'd do with the money. One quite common bad idea is paying off a mortgage.

Why would it be a bad idea to take 25% of pension pot at 55 to pay off a mortgage?

I currently have a pension pot of approx £170k, which I hope will be around £300k by the time I reach 55 and I was planning to take 25% to pay off mortgage.

Thanks

dunstonh

Why would it be a bad idea to take 25% of pension pot at 55 to pay off a mortgage?

If you used secured income option then you would be buying an annuity at really poor rates (10 years earlier than average retirement age). Plus, historically investment returns are higher than mortgage interest rates. You would also reduce your death benefits.

There can be times it is worth it but in most cases it would not.

RingtheChanges

dunstonh wrote: »

If you used secured income option then you would be buying an annuity at really poor rates (10 years earlier than average retirement age). Plus, historically investment returns are higher than mortgage interest rates. You would also reduce your death benefits.

There can be times it is worth it but in most cases it would not.

Thanks for quick response. So does that mean that I can't just take 25% and leave the rest, but have to buy an annuity at 55?

Sorry if that is a really silly question, but it all just goes over my head. I am terrible with money in all aspects of my life, but trying to change that, and thankfully have a wonderful boss who has been extremely generous with pension contributions.

dunstonh

Thanks for quick response. So does that mean that I can't just take 25% and leave the rest, but have to buy an annuity at 55?

It means you have to commence the pension. You dont have to buy an annuity but you would have to put the pension into a unsecured option (hence the lower death benefits)

Zim_Zimmerman

Can I take my lump sum (british steel) and carry on working at 55 ?

Zelazny

Zim_Zimmerman wrote: »

Can I take my lump sum (british steel) and carry on working at 55 ?

Depends on the rules of the scheme - some schemes do allow this, but I've not seen it often. Best bet is to ask the administrators.

lotusblue

Hi,

I have two frozen pension plans from previous employers, at present a total pot of approx £18k. I am 54 now and wondered if i can withdraw all of this next year when 55.
An £18k pot would give very little annuity so hoped i could withdraw all and re-invest in some other way.