Release pension cash

Linton

chocca wrote: »

Hi, I assume I'm being thicker than condensed milk, but, here goes...
Over the years I've managed to acquire the following pittances towards retirement:
1, A final salary scheme that's going to pay approx £1500 per annum
2, A company scheme that'll pay approx £600 per annum
3, A private pension with a current pot of £40k.
I'm 55 shortly and have several health issues ( nothing terminal, touch wood) and would like to get my sweaty paws on some of the above as a lump sum to treat my family and myself while I'm still fit and young enough to enjoy it. What are my options for freeing up some cash? And can I leave them separate ie leave the company ones in situ till I retire? Thanks.

Each pension can be taken independently.

At 55 you can take your private pension, but all you can get your hands on is the 25% tax free lump sum - £10K. The rest has to be paid out as an ongoing income by an annuity or drawdown starting now or at some time in the future. You would have to check first whether there are any guarantees associated with it - these can be very valuable and you may lose them if you take the pension early. Also note that your health issues may lead to a significantly higher payout when you retire which may make taking the tax free lump sum less desirable.

Whether you can take your old company pension depends on the scheme rules and the nature of the pension. If its Final Salary or similar you are unlikely to be able to do much else with it as its generally a very bad idea to leave such a scheme. But again you could only get 25% of the value (or some similar amount determined by the scheme rules).

My comments on FS pensions also apply to your current final salary pension.

Of course anything you take now will result in less when you retire. Do you want that for you and your dependent family if any? You dont need much money to enjoy yourself when you are "young enough". You do however need it to avoid being miserable when you arent.

gbspark

Can I top up my Pension?

atush

gbspark wrote: »

Can I top up my Pension?

generally, yes. But if no, you can open a personal pension.

Davidbluee222

I am now worried. Both my wife and I have just moved 2 older pensions into SIPP with the promise of 20% Tax free available to us. Now my pension (£84k) has been moved to a Hagreaves and Landsdown SIPP and I can see it online. As yet I can see no charges and have not accepted any money out of the Pot yet. My wife has had a delay so we may be able to stop that one. The SIPP has not yet been invested as yet, so I hope I am okay if I dont take any money out?
I cant believe I was caught out with this. We had to sign a few forms for "No Advice" but cant see how the firm who are running this will make money.
We did do this purely to release funds to get a deposit for a house for the kids
Help please, my retirement is suddenly looking less rosey

dunstonh

I am now worried. Both my wife and I have just moved 2 older pensions into SIPP with the promise of 20% Tax free available to us.

What promise of 20% tax free cash is this? Is that a typo and you mean 25%?

I cant believe I was caught out with this. We had to sign a few forms for "No Advice" but cant see how the firm who are running this will make money.

What is it that you are saying you have been caught out on?

Davidbluee222

dunstonh wrote: »

What promise of 20% tax free cash is this? Is that a typo and you mean 25%?

No 20% before you are 55 is what we were told.


What is it that you are saying you have been caught out on?

From what I have read, there was a strong chance that we would lose the whole pension(s).
That was based on paying tax on the 20% and whatever the fees were from the people who advised us.

dunstonh

Davidbluee222 wrote: »

From what I have read, there was a strong chance that we would lose the whole pension(s).
That was based on paying tax on the 20% and whatever the fees were from the people who advised us.

Who advised you? You say you used the HL SIPP but that is a non-advised product/service. They provide a service to people who know what they are doing and do not want an advice service.

Where are you getting this 20% tax from?

It may be an idea to tell us what transactions you are doing as its not clear from your post. A bit suggests you are crystallising the fund and taking the 25% tax free cash but the tax you think you are going to pay suggests there is more to it.

Davidbluee222

Sorry. I will try to be a bit clearer.
I am mid 40s and my wife is late 40s
My wife looked into releasing money from a pension. She contacted a company who said that they could do that, all they needed to do was to move the current pension to a SIPP. We could then receive up to 20% of the total pot as a tax free lump sum now. As this seemed very favourable, I also moved an old personal pension that I no longer pay into (we have others set up) via this company into a SIPP. We were told the government wanted people to invest into uk firms to promote growth.
I have since then seen warnings that this is a con and that you can not receive any early cash payment from a pension and it is likely that you would be liable to tax on any lump sum and that there may will also be a payment to whoever set this up.
From Money Supermarket
"Pension savings are only tax privileged so long as funds are not touched until the saver is at least 55, meaning that any early redemption will see HM Revenue and Customs (HMRC) take a significant cut. The Pensions Regulator suggests that that up to 70% of funds could go straight to the taxman"

"On top of having HMRC take a chunk of your funds, the operators of these schemes will take a fee of between 10% and 20% of the amount that has been released or borrowed. The combination of this fee and taxman's cut could see you shorn of around half of your retirement savings."

I have not accepted any form of cash from the transaction as it now seems that this is

I apoligise if this does not make sense as pensions are not exactly my area of expertise.

dunstonh

I am mid 40s and my wife is late 40s

First thing there is that you are too young to access the pension. Any attempt to do so would be unlawful and see you facing HMRC penalties (of upto 55% - possibly more if they add interest if it takes many years to find out - and they usually do lag on these)

My wife looked into releasing money from a pension. She contacted a company who said that they could do that, all they needed to do was to move the current pension to a SIPP. We could then receive up to 20% of the total pot as a tax free lump sum now. As this seemed very favourable, I also moved an old personal pension that I no longer pay into (we have others set up) via this company into a SIPP. We were told the government wanted people to invest into uk firms to promote growth.

Ok, so that looks like one of these pension liberation scams.

I have not accepted any form of cash from the transaction as it now seems that this is

Where does Hargreaves Lansdown come into it? They are a regulated company and do not get involved in this unlawful activity. If the money is with HL and in investment funds, then you are fine. The scams would not use a company like HL.

Davidbluee222

That's where I am confused as the H&L all seems to be the whole value of the pension fund and I don't expect the advisor I used to be able to get their hands on any of it.
Looks like I was lucky. Now need to work out how to use the SIPP
Thanks for your help