Cashing / ending a pension

dolliebird

Hi,
Hope someone can help me with this. Hubby and I were wondering whether it would be possible to end one or two of his pensions plans (collected during his working life at various different companies) and reinvest the capital somewhere else (we were thinking a long term buy to let.). Is this a daft idea or do-able? Thanks for any advice.

dunstonh

You cannot cash in a pension. You can invest a pension in nearly any conventional investment (shares, funds, ITs, ETFs, cash etc).

It is not a daft thing to do as you cant do it.

System

If he is over 55 then he can compound them all into another, larger pension pot, and then take them as a 25% tax-free lump sum, assuming the total pot is large enough..

Individually they cannot be cashed in. Collectively, they can be.

dunstonh

So if your pension was worth £50k, we would give you £25k now,

Which would be an unauthorised payment under HMRC rules and subject to penalty fine.

you could invest this in a 4.5% cash isa now and in 15 years time it would be worth £49k,

What about the cost of the fine when it comes a couple of years down the road?
Why not stay in the pension and continue to get investment returns with no HMRC fine?
Why have you not factored in your extortionate cost?

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.

Now you see why the Govt doesn't let unauthorised people give advice. Pension income rates are currently higher than savings rates. So, you say on the one hand put it in savings to get the income but then knock pensions despite them providing a higher income.

I hope the board does not remove your post as a spam as sometimes it does more good to highlight dodgy and illegal schemes like this.

somethingcorporate

Spam off Tim you bleeding crook!

RichandJ

:spam::spam::spam: etc, etc etc (just to make up 10 chars)

agree with somethingcorporate.

thenudeone

dolliebird wrote: »

I were wondering whether it would be possible to end one or two of his pensions plans ... and reinvest the capital somewhere else (we were thinking a long term buy to let.). Is this a daft idea or do-able? Thanks for any advice.

You could transfer the pension into a full SIPP which will allow you to invest in all sorts of exotic things including commercial property, unlisted shares, etc. and also borrow money up to a certain limit.

Domestic Property isn't allowed (unless part of genuine portfolio of £1m or over) nor is any moveable property such as wine, race horses, cars, yatchs, etc. (to stop you using your pension to get benefits now), nor is investment in a company in which you are a director or have a significant interest.

But this sort of investment is higher risk and only really suitable for high net worth individuals who have enough other provision to be able to absorb the possible losses and afford the relatively high charges from this sort of bespoke SIPP.

A cut-down SIPP will allow you to invest in a very wide variety of funds and shares from around the world, (including funds which invest in domestic property, gold, futures or whatever).

It has long been understood that the best reward / risk relationship is achieved with as wide a variety of investments as possible (search "portfolio theory"); so putting all your pension eggs in the domestic property market basket, when you probably already have a six-figure sum invested there (in your own home) wouldn't be a good idea even if it was possible.

NB:I'm old enough to remember several periods of 30-40% house price falls. This could happen again.

coastline

http://www.bbc.co.uk/news/business-12468282

http://www.thisismoney.co.uk/money/pensions/article-2070677/Pension-savers-pension-pot-cash-freebie-new-tax-rules.html

System

thenudeone wrote: »

nor is investment in a company in which you are a director or have a significant interest.

.

Not actually true. A popular use of a property SIPP is precisely that - to invest in the member's own company premises, or jointly in conjunction with other directors or business partners.

thenudeone

Clifford_Pope wrote: »

Not actually true. A popular use of a property SIPP is precisely that - to invest in the member's own company premises, or jointly in conjunction with other directors or business partners.

This is simply not allowed if the pension holder is (alone or with family or associates) a controlling director.

http://www.mctrustees.co.uk/unquoted-shares

According to Xafinity, this means that they can't (alone or with family or associates) have 20% or more of share capital (although 20% may be an internal limit rather than an HMRC one)
http://www.xafinity.com/Uploads/Files/sipp-unlisted-shares-guide.pdf