Under 55yrs pension fund less 18K early cash in?

smartie50

I have a pension with Equitable Life (ha-ha!) They have sent me, on my request, a statement representing my with-profits adjusted financial amount. This is £15.5k. I started this policy in my early 20's and stopped when things went wrong at EQ. Due to my family circumstances, this would be of benefit now. What would be my tax rate on £15.5K? Anyone's advice pls.
Many thanks.

molerat

55% as it will be an unauthorised transaction but EL will not allow it anyway. You can only access the full amount if you are over 60 and all of your pension pots are less than £18K. You will be able to take 25% tax free at 55 though. There are illegal ways of accessing the whole amount but with the cut the scammers take plus the 55% tax on the whole amount you won't have enough left to buy a pint.

smartie50

:beer: Thanks for confirming my already dreaded thoughts. Just one more thing if you're still awake! Does my with-profits fund of £15.5K increase/decrease over the next 8yrs if I am not allowed to access this until I'm 55?

atush

It should increase, but you could also transfer it out to another pension and invest in equities instead if you don't like the idea of WP.

woolly_wombat

smartie50 wrote: »

:beer: Thanks for confirming my already dreaded thoughts. Just one more thing if you're still awake! Does my with-profits fund of £15.5K increase/decrease over the next 8yrs if I am not allowed to access this until I'm 55?

You will need to check your policy details to find your contract end date (typically at age 60). Also look for a guaranteed investment return (GIR), typically 3.5% pa, which is only payable at the contract end date.

If you decide to transfer out early then the GIR will not apply, and Equitable Life will apply a 'financial adjustment' i.e. a reduction.

See:
https://group.equitable.co.uk/etg/elas/groupmarket.nsf/web+pages/pdflib/$file/InvestFunds05.08.pdf

WW