Pension - Cash In?

amartin1908

Hi

My partner is 38 and has two company pensions. One with this current employer and one from a previous employer.

He currently has £34500 in the old one and is wondering if it is possible to cash it in so that he can get a deposit together for a new house. He doesn't mind if he loses a lump sum of it, as long as he can get enough for the deposit.

~Is this possible?

Zelazny

Is he seriously ill or over 55?

If not, then he can't take anything from his pension.

See https://forums.moneysavingexpert.com/discussion/3447527 for more details

atush

No, unless he is over 55 or likely to die in the next 12 months (in which case won't be offered a mtg). If he is over 55, he can get 25% of this pension as a lump sum (depending on the scheme rules some are different and it could be 60).

Even if you could, you would be mortgaging your future retirement for a bigger house today. Not wise as you would have a very poor retirement acting this way.

There is a sticky at the top of the page, Can I Cash In My Pension? Have a read.

amartin1908

atush wrote: »

No, unless he is over 55 or likely to die in the next 12 months (in which case won't be offered a mtg). If he is over 55, he can get 25% of this pension as a lump sum (depending on the scheme rules some are different and it could be 60).

Even if you could, you would be mortgaging your future retirement for a bigger house today. Not wise as you would have a very poor retirement acting this way.

There is a sticky at the top of the page, Can I Cash In My Pension? Have a read.

He wouldn't have a poor retirement as his current pension is over £150K

Zelazny

amartin1908 wrote: »

He wouldn't have a poor retirement as his current pension is over £150K

If that's £150k per year, then that's a very good pension and worth holding on to. It's also probably over the Lifetime allowance and would therefore accrue significant additional tax charges, and it may be better to look at another method of saving for retirement.

If (as seems more likely) you mean a fund of £150k, then that's enough to buy a pension of about £7.5k per year at 65. Not exactly a king's ransom...

atush

I agree, 150K and 7.5K per annum isn't really a lot to live on. Esp if you want to take it before the new SP age.

I doubt someone earning enough for a 150K per annum pension would need a 35K pot to buy a house though.

amartin1908

atush wrote: »

I agree, 150K and 7.5K per annum isn't really a lot to live on. Esp if you want to take it before the new SP age.

I doubt someone earning enough for a 150K per annum pension would need a 35K pot to buy a house though.

Guys - he currently has 150K in the pot - with another 30 years to go I think his pension is going to be more than enough to live on at the rate he is paying into it

Zelazny

amartin1908 wrote: »

Guys - he currently has 150K in the pot - with another 30 years to go I think his pension is going to be more than enough to live on at the rate he is paying into it

£150k is not bad going for a 38 year old (and probably more than I'll have), but that's not the problem.

It doesn't change the fact that there's no legal way to access the cash from the other pension fund.

atush

but still, you can't have this old opension now as he is clearly too young (and happily too healthy ;-)

What you can do is (and I dont' rec this) reduce his current contribs and all your other spending to save the money needed for a new house. Or fix up/extend your old one? You seem to be saying he ahs a very high contribution level at present. Which is always a good idea, but not if you don't have savings of 6 months spending in cash, and some other savings and investments too. In which case you could use these other pots for the new house then bulid them back up again.

Generally speaking we don't recommend putting all your savings into any one basket (incl pensions). You alwyas need an emergency cash buffer and shorter term (ie non retirment) savings. It seems from what little you have told us, that all your 'extra' seems to be going into a pension as you don't have savings to buy the bigger/new house?

amartin1908

atush wrote: »

but still, you can't have this old opension now as he is clearly too young (and happily too healthy ;-)

What you can do is (and I dont' rec this) reduce his current contribs and all your other spending to save the money needed for a new house. Or fix up/extend your old one? You seem to be saying he ahs a very high contribution level at present. Which is always a good idea, but not if you don't have savings of 6 months spending in cash, and some other savings and investments too. In which case you could use these other pots for the new house then bulid them back up again.

Generally speaking we don't recommend putting all your savings into any one basket (incl pensions). You alwyas need an emergency cash buffer and shorter term (ie non retirment) savings. It seems from what little you have told us, that all your 'extra' seems to be going into a pension as you don't have savings to buy the bigger/new house?

Yes that is correct. It's a shame he cannot access the old one, but I think the advice given of reducing contributions is a sound one. Thank you

atush

I hate to recommend reducing pension contribs (do try to make sure he still contributes enough to get the max employers contribs) but you really do need other savings for shorter term needs such as housing, children, School fees, cars etc. You may need to reduce his income to retain things like CB or sty out of HRTax?

Try to slim down HH spending too if you can. Always the first thing to do.