25% Tax Free Pension Cash at age 55

lctcb

Hi,

In around 5 months I will be 55 and therefore legally able to access 25% of my pension pot tax free.

My question is I really could do with some of that money now. I have read that it is possible to use this guaranteed tax free payment as collateral against a loan possibly even with a main street bank?

If any of you have any knowledge of this I would be grateful for any advice?

So just to clarify I am only looking at ways where my legal access to 25% of my pension at age 55 can be used as collateral for a loan now....

Thanks for any help

atush

Not as far as I know. You'll just have to wait (and pay min payments on your debts as you go along the next 5 months).

I suppose you could ask your bank for a larger overdraft on the back of it, but you'll pay an awful lot of interest in the next 5 mons.

lctcb

atush wrote: »

Not as far as I know. You'll just have to wait (and pay min payments on your debts as you go along the next 5 months).

I suppose you could ask your bank for a larger overdraft on the back of it, but you'll pay an awful lot of interest in the next 5 mons.

That's one of the area's I was thinking i.e. do banks have procedures in place to allow overdrafts/loans based around the tax free sum at age 55?

dtaylor84

It's highly unlikely a bank would want to get involved with this, even if there is no rule against an unsecured rule (there could be -- I just don't know).

If a loan is secured on your pension, that's an unauthorised payment and subject to lots of tax: http://citywire.co.uk/new-model-adviser/fsa-warns-against-pension-loan-schemes/a499078

lctcb

dtaylor84 wrote: »

It's highly unlikely a bank would want to get involved with this, even if there is no rule against an unsecured rule (there could be -- I just don't know).

If a loan is secured on your pension, that's an unauthorised payment and subject to lots of tax: http://citywire.co.uk/new-model-adviser/fsa-warns-against-pension-loan-schemes/a499078

From what I understand it's not unauthorised because you are not borrowing against the pension itself but the legal 25% tax free payment at 55. I could be wrong but that's why i'm on here to see what others have to say before I start the ball rolling.

mania112

No, for all the trouble and fines (from HMRC) you'll be open to, you're much better off waiting.

It's only 5 months!

dtaylor84

lctcb wrote: »

From what I understand it's not unauthorised because you are not borrowing against the pension itself but the legal 25% tax free payment at 55. I could be wrong but that's why i'm on here to see what others have to say before I start the ball rolling.

Did you read the link? It is absolutely unauthorised.

HMRC are cracking down on "pension release" schemes. It is a terrible idea -- don't do it.

That's what I have to say.

lctcb

dtaylor84 wrote: »

Did you read the link? It is absolutely unauthorised.

HMRC are cracking down on "pension release" schemes. It is a terrible idea -- don't do it.

That's what I have to say.

Yes I read the link and I am well aware of the pension liberation scams....

I tried to make it clear that I am not looking to get a loan aganst my pension or transfer it etc etc....

What I am asking is wether the totally 100% legal 25% tax free cash payment at age 55 can be used as collateral to borrow in the short term?

In other words I know that in 5 months I will legally be able to access £20,0000 tax free so why can't that be used as a guarantee against any borrowings?

mania112

There are no companies that will do that for you (that I know of).

Perhaps someone in your circle of family or friends will help you out?

EDIT: Can you explain why you need £20k now?

lctcb

mania112 wrote: »

There are no companies that will do that for you (that I know of).

Perhaps someone in your circle of family or friends will help you out?

EDIT: Can you explain why you need £20k now?

Don't need all of the £20k but £5k + would just make things a little easier in the short term....

dzug1

lctcb wrote: »

Yes I read the link and I am well aware of the pension liberation scams....

I tried to make it clear that I am not looking to get a loan aganst my pension or transfer it etc etc....

What I am asking is wether the totally 100% legal 25% tax free cash payment at age 55 can be used as collateral to borrow in the short term?

Given that that cash sum is PART OF YOUR PENSION you do appear to be trying to get a loan against it