release cash out of my pension early

antoinette_rose

I have a large private pension that i would like to release cash out of.
I am only 48

how do i do it?
can you recomend any cash in pension schems?
does the goverment take a % from these schems?

help ???

sleepless_saver

https://forums.moneysavingexpert.com/discussion/3447527
https://forums.moneysavingexpert.com/discussion/4171571

The previous answers you were given haven't changed, sorry.

molerat

Legally you cannot until you are 55. Any company that offers this is working at very best on the edge of the tax laws and are being actively investigated by the authorities. Most of them offer loans that are backed by their very poor pension investments that you must put the remainder in meaning that all you end up with is the cash you get up front and the possibility of a huge tax bill.

dunstonh

I have a large private pension that i would like to release cash out of.
I am only 48

how do i do it?

Commit suicide as the full value is paid out on death or suffer a very serious illness.

can you recomend any cash in pension schems?

We are not in the habit of recommending scams or illegal schemes.

does the goverment take a % from these schems?

HMRC, when they find out, will fine you up to 55% of the amount you have taken out (it can be more than that if it takes some years and you have tried to hide it from them and require you to put all the money back in again.

help ???

you are not going to get the money from your pension legally and if you choose a scam or illegal scheme to do it then you are just scheduling a tax inspection and fines for the future.

antoinette_rose

i realise that a pension is a pension and not a saving accounts, but with the current climate at the moment ....and the prise of everything go up and up ....its very easy to find yourself in financial problems where you struggle to make end meet.....The goverment should help people release there own money in these situation to avoid people making the wrong descsions and choosing one of the companies offering money early.

does the goverment not recomend any compaines or any solutions to people like me...... i dont want to lose my house ....and have to sell everything i own to pay debts when i have thousands of pounds stuck in a schem that i can not release ......its my money itsnt it !!!!

jem16

antoinette_rose wrote: »

......its my money itsnt it !!!!

It's not actually. Once the money is paid into a pension it is held in trust for you until retirerment.

You'll need to think of another way out of your financial troubles.

dunstonh

The goverment should help people release there own money in these situation to avoid people making the wrong descsions and choosing one of the companies offering money early.

The Govt is considering it but doesnt seem that interested at present. Probably as it would mean you having to rob your retirement to pay for now. So, you are just deferring your problems until later.

does the goverment not recomend any compaines or any solutions to people like me

It is fair to say the Govt will not recommned scams or illegal schemes. Although when you get caught and have to pay the 55% penalty, I am sure they wont mind too much.

Citizens advice bureau may be worth a visit.

its my money itsnt it !!!!

No. It ceases to be your money when you put it in a pension. It is held in trust and you are the beneficiary but it is not actually owned by you.

sleepless_saver

antoinette_rose wrote: »

.. i dont want to lose my house ....and have to sell everything i own to pay debts when i have thousands of pounds stuck in a schem that i can not release ......its my money itsnt it !!!!

If you're at that stage, you need proper advice about your debts. Have you tried any of the (free) debt advice organisations listed here https://forums.moneysavingexpert.com/discussion/2077631 ?

vman

Hello, there are couple of things I’d like to open up with here.

Firstly as people have pointed out, this this is very much a recurring question as others have pointed out. That said I have waded through those threads in the past and find it hard to bite my tongue. They are often dominated by know-it-alls who arrogantly dismiss this out of hand and the casual reader is left with an ill-informed view. One thing I’m sure everybody will agree on is take independent advice. Now, here’s the controversial part. There is no such thing as one type of financial advisor. When you are talking about leveraging funds, possibly from a pension, you are entering a highly specialised area so you need to speak to somebody who really knows this stuff. The man from the Pru’ type IFA is not a specialist in this area; he is basically somebody who flogs a little bit of life assurance and a pension, etc. Don’t get me wrong, they serve a purpose and are suitable for most PAYE folk but personally I would stay clear of advice from them in this area as this is not what they specialise in. Serious investors (for example) don’t go to man-from-the-Pru type IFAs and there is a reason for that. (I don’t think the man from the Pru exists anymore btw, but that’s how I categorise). Now here comes the dangerous bit, once you start heading over to this specialist area you will find they are lots of very genuine, ethical people but, unfortunately there are lots of crooks who will happily swindle you. When you start looking it’s very hard to differentiate the two. I could post links of a couple of people who I would trust as genuine but I’d get dismissed as some kind of spammer. (TBH, being a cynical person, I’d probably dismiss it in the same way if I was reading it from someone else!)

Second point. You say you want to cash-in your pension to help with your mortgage. It’s good that you are thinking of innovative ways to solve your issues but know that you have come up with one solution (which may be a shark pool) don’t stop there. There are literally dozens of other ways to solve this. For example, I have no idea how much pension pot you have but you may be able to transfer all or some of it to specialist SIPP (more specialist than Hargreaves Lansdown type providers) keep it safely locked away earning 8-9% (probably better than what you are currently getting!) and still use it as leverage for hands-off investments earning a few hundred quid a month now. You may find that’s enough to help you through (and all perfectly legal! but generic IFAs may well tell you it’s not). Alternatively, as you are only seven years away from being able to claim a 25% lump sum from the pot you may find an options investor who would happily take on all or part of your mortgage for seven years. They would expect a fee of course (everybody has to make a living) but it may be small and almost certainly deferred until payment. In fact they may even give you a few K upfront as part of the deal, especially if you are in arrears (in this scenario they would need to protect the property us much as you do). You’re in a strong position as you can all but guarantee a lump of money in a relatively short period of time. Of course, a third solution may just be as simple refinancing your house on more favourable terms! These may be wholly inappropriate to you; I’m just putting them out there to encourage you to keep thinking innovately. You will see that none of these three options resulted in you cashing in your pension. I am in no way a financial advisor but my gut feeling is that any solution that involves ‘selling’, liquidating, cashing-in, a pension smells, so personally I’d stay well away from that. Actually I was talking to somebody about an investment opportunity on the continent the other day and asked if it was SIPP-able, I was told “yes, but why not just liquidate your pension and use cash as the fees will be much lower over the period – I can put you in touch ...”. The investment itself sounded very plausible but as soon as I heard ‘liquidate’ and ‘pension’ in the same sentence I lost all confidence in them as an investment partner. I don’t like to pre-judge, it may work for some people but personally it’s not for me.

(sorry it’s a very long post!)

dunstonh

Alternatively, as you are only seven years away from being able to claim a 25% lump sum from the pot you may find an options investor who would happily take on all or part of your mortgage for seven years. They would expect a fee of course (everybody has to make a living) but it may be small and almost certainly deferred until payment. In fact they may even give you a few K upfront as part of the deal, especially if you are in arrears (in this scenario they would need to protect the property us much as you do).

Sending an inexperienced investor into the world of options is highly risky. Being paid a backhander from a pension investment is a breach of HMRC rules (it is an unauthorised payment) as well as highly unethical (if they want to give back some of their charges that is fine and they can do it within the pension. If its some marketing incentive then you need to ask why they are doing it and how much is it costing you to get that money as they are not giving it out of love. It comes out of someone's pot. Usually your own).

jamesd

vman, another approach that can be used is to buy outside a pension something that is very lightly traded. Then offer to sell at a higher price. Buy from within the pension. The pension buy moves some money from the pension to outside the pension. The pension then has to sell and will probably see a loss at least as great as the gain outside the pension.

There are substantial risks with this, like other parties offering to trade - the pension could end up buying not from the non-pension offer but from a high but lower offer from someone else.