Can I cash in my pension?

Zelazny

bluey1234 wrote: »

I am absolutely sure my OH and I fully cashed in our police pensions :eek: of 5 and 4 years service respectively, back in our heady youthful days in 1983 (our early twenties)! - one of the many absolutely foolish financial things we have done together!- (we needed some money to travel and I cannot remember how much we got, but not too much)

I am sure this was possible back then, and we now have no police pension at all from then :eek: Surely the police scheme rules must have changed since?- obviously for the better as given a choice now I would never have done it - total wallies I know!

In 1983, Pensions preservation rules only applied if you had more than 5 years of service. It's possible you were both able to get a refund of contributions (rather than "cashing in") if the 5 years was actually nearly 5 years (or possibly exactly 5 years). From 1988 the rules changed so that any benefit in excess of 2 years was preserved, so you are correct that this would not be allowed now.

It's worth noting that while you would have got back what you paid in, you would have had to pay any tax/NI that was due on that money at the time, so would end up no better off than if you'd never joined the scheme in the first place.

Zelazny

bluesydave wrote: »

Hello,

I'm 44 years old, I have approximately £20k in a private pension.

I suffer from severe depression and lost my job in 2010, and am unable to work at present.

I am in danger of losing my home due to mortgage arrears. I've put the house up for sale and am going to live in my camper van.

With the recent changes to benefits policy, I'm finding it difficult now even to get ESA, or mortgage interest payments from the gov. They seem to be quite merciless.

If I could access my pension fund, I would be able to avoid losing the house and/or resolve a lot of my financial problems.

On top of this, I have serious doubts that the economy will recover, and believe financial collapse is imminent. Pension funds will be worthless if this happens.

Is there no way then, for me to cash in my pension now, due to my circumstances?

Thanks for your help,

Dave.

I think you already know the answer (particularly if you've read this thread). Unless you're over 55 or on death's door you can't get a penny (legally, at any rate - and if you do it illegally there's a very high chance you'll be caught, landed with a big tax bill and have to repay the money).

bluesydave

Zelazny wrote: »

I think you already know the answer (particularly if you've read this thread). Unless you're over 55 or on death's door you can't get a penny (legally, at any rate - and if you do it illegally there's a very high chance you'll be caught, landed with a big tax bill and have to repay the money).

I read the the thread yeah. I suspected that would be the case. Thanks for your help!

Zelazny

bluesydave wrote: »

I read the the thread yeah. I suspected that would be the case. Thanks for your help!

Happy to help. Have you looked at the Debt-Free Wannabe board? They have lots of great advice and good ideas for saving money and dealing with debt.

Good luck!

bluey1234

Zelazny wrote: »

In 1983, Pensions preservation rules only applied if you had more than 5 years of service. It's possible you were both able to get a refund of contributions (rather than "cashing in") if the 5 years was actually nearly 5 years (or possibly exactly 5 years). From 1988 the rules changed so that any benefit in excess of 2 years was preserved, so you are correct that this would not be allowed now.

It's worth noting that while you would have got back what you paid in, you would have had to pay any tax/NI that was due on that money at the time, so would end up no better off than if you'd never joined the scheme in the first place.

Thanks very much Zelazny - Thank heavens the rules were changed for others that followed - was a big stupid mistake, but luckily we have other pension now
Thanks again

SippTechie

bluesydave wrote: »

Hello,

I'm 44 years old, I have approximately £20k in a private pension.

I suffer from severe depression and lost my job in 2010, and am unable to work at present.

I am in danger of losing my home due to mortgage arrears. I've put the house up for sale and am going to live in my camper van.

With the recent changes to benefits policy, I'm finding it difficult now even to get ESA, or mortgage interest payments from the gov. They seem to be quite merciless.

If I could access my pension fund, I would be able to avoid losing the house and/or resolve a lot of my financial problems.

On top of this, I have serious doubts that the economy will recover, and believe financial collapse is imminent. Pension funds will be worthless if this happens.

Is there no way then, for me to cash in my pension now, due to my circumstances?

Thanks for your help,

Dave.

There are circumstances where it is possible to start taking a pension before age 55 due to ill-health. The ill-health can relate to either physical or mental issues.

This is possible if your illness prevents you from and will continue to prevent you from carrying out your current, or in your case most recent, occupation.

Being able to take your pension early on this basis is reliant on two factors.

Firstly your pension provider would need to be willing to pay the pension to you on this basis - they may for instance apply tighter rules, for example you it may be a requirement that you are not able to carry out any occupation.

Secondly your doctor would need to be willing to provide a letter to your pension provider indicating that you are unable to carry on your (or perhaps any) occupation through ill health.

If your health did recover sufficiently to enable you to carry on your/an occupation you would need to stop receiving the pension.

Hopefully not sending you on a wild goose chase here, but it may be worth exploring. Best of luck.

Balmore0

I'm 55 next year and I've already received letters from some of my pension providers about what to do next year. Is it possible to take the 25% Tax free lump sum at 55 but defer buying annuities until I need them, i.e. 5 to 10 years later?

dunstonh

Balmore0 wrote: »

I'm 55 next year and I've already received letters from some of my pension providers about what to do next year. Is it possible to take the 25% Tax free lump sum at 55 but defer buying annuities until I need them, i.e. 5 to 10 years later?

It is. Although your current pension may not allow it.

jamesd

Yes, it's entirely possible. You can also use income drawdown and reinvest the income in more pension contributions to build up another tax free lump sum. Income drawdown just means leaving the money invested and taking an income out of it.

OldBeanz

I am 58 and plan to retire at 62/3 when I should have a civil service pension income of just over £20k. I believe the govt are due to review the amount for flexible drawdown every 5 years which would make it difficult for me to plan exactly for this option at either 60 or 66. My wife is 7 years younger than me and will retire at 60. This will leave her with a work pension of £3k at 60 and £11k at 67 (she has 3 small defined benefit pensions). She also has a Stakeholder of £17k which she cannot add to her present work pensions which is a relic of her career breaks and we continue to add £16pcm.
I have a freestanding AVC and SIPP of value £70k to which I will add about another £20k during the next few years - the aim being £100k.
The £100k is to cover the gap between her years from 60-67 as we intend to do a fair amount of travelling. In the event of my death she would be entitled to half my pension which should allow her to use flexible drawdown. Her £17k we would just use when she reached 75 or as a disaster fund.
I just assumed the best option would be to let my AVC/SIPP gently mount up but am now beginning to wonder if taking the lump sum and re-investing would be advantageous?