Release pension cash

torbrex

greenglide wrote: »

But the ability to crystallise the pot, takes the 25% tax free now and withdraw the rest over a few years exists now - doesn't it?

yes but, I am limited on how much of an income I can take in relation to the size of my pot

ManAtHome

greenglide wrote: »

But the ability to crystallise the pot, takes the 25% tax free now and withdraw the rest over a few years exists now - doesn't it?

You can currently only take a percentage of the remaining 'pot' (after the tax-free 25%) depending on age - google Pension GAD.

VeronicaMars13

Hi,

Does anyone know the situation if I want to take money out my pension early but I have 25% of my pension in cash and the rest in property? Can I take the 25% cash out as the lump sum (I am 56) and will I require up to date valuations for the property if I am able to do this? I have spoken to 2 financial advisers and they haven't known the answer to this.
Thanks

dunstonh

Can I take the 25% cash out as the lump sum (I am 56) and will I require up to date valuations for the property if I am able to do this?

You will need to ask the administrators.

I have spoken to 2 financial advisers and they haven't known the answer to this.

No-one here can answer it either as it is up to the administrators to decide. I would guess they would as it is a crystallisation event. Although it depends on how long ago the last valuation would have been carried out.

jamesd

VeronicaMars13 wrote: »

Does anyone know the situation if I want to take money out my pension early but I have 25% of my pension in cash and the rest in property? Can I take the 25% cash out as the lump sum (I am 56) and will I require up to date valuations for the property if I am able to do this?

Yes, you can do this assuming you're asking about a defined contribution work pension or personal pension, not defined benefit like final or average salary.

The key restriction that you need to know about is that only commercial property is permitted in a pension. No residential except for rare exceptions like large student letting projects. Shops, factories and warehouses are fine, flats and houses aren't.

If you want to circumvent that you will need to use flexi-access drawdown to withdraw the 75% from the pension so that it is no longer subject to the pension restrictions. This is unlikely to be a good idea, in part due to the tax cost. The amount you take out is added to your normal taxable income for the years in which you take it out. That means higher rate tax above about £42,000 of total income, losing your tax free personal allowance starting at £100,000 and paying 45% income tax above £150,000.

Individual pension schemes have different rules and mainstream pension products do not normally allow direct ownership of property, though a large number do allow commercial property funds.

daveb45_2

I have one pension pot that only has £17000 in it but it has protected rights of £14000, can I take all the £17000.

dunstonh

daveb45 wrote: »

I have one pension pot that only has £17000 in it but it has protected rights of £14000, can I take all the £17000.

The protected rights would have been reclassified as non-protected rights when protected rights were abolished. So, yes you can.

returners5

I am over 55 and want to make a large purchase, which would normally require a loan - which I can get at 7.5% interest.

Instead of taking a loan and pay interest would it make sense to take the tax free portion allowed from my pension and use that (it's not a final salary pension). Then pay the equivalent of the loan payments as an AVC to my pension until retirement - I believe these payments would also be tax free (deducted from my gross salary before tax if calculated).

I lose the difference between the 7.5% interest and the return on the pension fund - but I gain the equivalent of the tax on this sum (I am a higher rate tax payer).

Does this work, and is it legal?

dunstonh

returners5 wrote: »

I am over 55 and want to make a large purchase, which would normally require a loan - which I can get at 7.5% interest.

Instead of taking a loan and pay interest would it make sense to take the tax free portion allowed from my pension and use that (it's not a final salary pension). Then pay the equivalent of the loan payments as an AVC to my pension until retirement - I believe these payments would also be tax free (deducted from my gross salary before tax if calculated).

I lose the difference between the 7.5% interest and the return on the pension fund - but I gain the equivalent of the tax on this sum (I am a higher rate tax payer).

Does this work, and is it legal?

Depends on whether you can raise the capital from the 25% Tax free cash or require access to the taxable 75% (with you being a higher rate taxpayer, that could be expensive).

returners5

I would make sure I stayed in the 25% band.

Incidentally is that 25% of that pension fund, or 25% of the sum of my different pension funds. (but I would only want to draw from one of them).