Could we cash in these pensions?

MsDemeanour

citricsquid wrote: »

Personally I believe it's far better to err on the side of caution and assume the person is doing it for the wrong reasons and provide information/advice from that angle.

This is what I've taken exception to on this thread I'm afraid. I asked a question and the automatic assumption is that it's for the "wrong reasons". Nobody has actually asked me why I'm asking, but rather have told me things such as our pensions are too small for our ages (helpful, not much that can be done about that without going back in time.)

Thankfully neither of us are terminally ill, I was just using that as the most extreme and valid example I could think of as to why somebody might need money in the here and now. Just because somebody might want to prioritise the present over 30 years into the future does not mean that they don't understand the importance of financial planning, or that they are in debt. I appreciate that people are trying to help but unfortunately I've found the comments preachy and presumptious.

Anyway as was rightly said it's a moot point because we can't access them anyway, so I'll leave it there.

ffacoffipawb

citricsquid wrote: »

I doubt any of those reasons justify ransacking retirement savings, hopefully those are not your only pensions. You should be thankful that the rules prevent you from accessing that money, unless you've got a bounty on your head it would be a mistake to try and obtain the money. Also I will pre-emptively warn you not to try and use any sort of "pension unlocking" scheme.

Absolutely. You must not ransack your retirement savings. That is the Labour party's job.

Freecall

Those replying are genuinely trying to be helpful although you may not see it that way. Let me try and explain from a generic perspective.

Let us suppose for the sake of argument that we have someone in dire financial circumstances. Let us imagine that this person is in serious debt, likely to be made bankrupt, probably losing there home.

Now, this person has a pension fund which looks quite attractive. Although unlikely to resolve all of their issues it would go a long way to help out.

So along comes a ‘pension liberator’ or whatever they want to call themselves. They take the pension, keep a large chunk for themselves and give what’s left to the person in trouble.

There are a couple of obvious problems which have already been mentioned such as the impact on long term pension provision and the fact the ‘pension liberator’ has helped themselves to a large slice of the fund but there are a couple of other not so obvious points as well.

Firstly, the money was ‘protected’ in the pension so if the worst had happened nobody could have taken it away whereas now it is simply a general asset and available to be grabbed by anybody who has a claim.

Secondly, to add insult to injury, when HMRC find out (and they will) they will present a big tax bill to the recipient. If there is some left they will take it, if it is all gone then HMRC debts don’t go away.

So our poor troubled individual now has even bigger financial problems and no long term pension fund to look forward to.

Believe me, people really are trying to be helpful.

atush

I am very sorry you felt we were being "Preachy".

but any such comments were based solely on your failure to provide details on why you wanted to cash the pension early and we would be remiss by not pointing out why it is a bad/illegal idea at age 36. It also indicates you don't understand pensions (which many don't so fair play).

And you don't need to go back in time to rectify your situation, you can pay in more going forwards to do so.

Nothing was meant in a mean spirited way.

hugheskevi

"Absolutely. You must not ransack your retirement savings. That is the Labour party's job."

I often think Labour get a raw deal when blame is handed out for 'pension raids.'

Looking back, we have Equitable Life from the Conservative era, as well as the defective 1995 Pension Act which led to the Financial Assistance Scheme and in turn the Pension Protection Fund. Although these would generally be labelled as incompetence rather than raids.

Labour had the Dividend Tax Credit changes, but at a cost of about £2-3bn p/a it pales into insignficance against the magnitude of the coalition change to revaluation and indexation which reduced the value of existing pension savings by about £200bn across the public and private DB pension landscape.

Labour was responsible for the 2006 pension tax reforms, which generally liberalised pensions, and whilst they did propose restrictions for highest earners (amended by coalition), the ' reductions of the Annual and Lifetime Allowances are far more restrictive. The liberalising of decumulation by the coalition is a significant liberalisation however.

Labour introduced automatic enrolment, expanding pension saving to amongst 5-8 million employees, whilst the coalition have reduced the generosity of public service pensions (saving £430bn) and limited the amount of personal pension saving which can be done.

Labour increased the basic state pension roughly in line with earnings between 1997-2010, whilst the switch from RPI to CPI uprating has reduced the level of the basic state pension today below what it would have been with no change, despite the triple-lock (which doesn't apply to Additional Pension).

So in terms of whose job it is to ransack retirement savings, I don't think it is clear-cut - Labour's record just isn't up to the £630bn worth of 'pension raiding' the coalition have achieved. Now the performance is against very different economic backgrounds, but even so, £630 billion is a lot of money. Whilst I'm sure everyone has their own opinion about what is a 'good raid' and what is a 'bad raid' taken in totality, I think the coalition wins easily.

Freecall

hugheskevi wrote: »

£630 billion is a lot of money.

........ and you can't argue with that.
:beer: