Cash out at 55

Chrisrm777

The 2.5% was a estimated figure but not far off what you'd get on an annuity at 55 - I mean if I'm wrong please enlighten.
I think we are all a bit closed off, the advice above welcome as it is, seems heavily biaised towards letting someone else have control of my money giving me a small monthly income while keeping the capitol DD not included.
Believe me having paid a substancial amount of tax over the year I really do understand who pays tax and what personal allowances are and when they apply.
You pay tax on any pension income over your personal allowance.
My original question was can I cash in a DB pension after April next year, I've been told no; possibly; yes but not for the equivialnent value to a DC, I still don't know.
I want to have my pension capitol in my control, I find it a little insulting to assume no one can handle a sum of money and use it wisely and earn money from it.
There seems a bit of a panic within the fin serv industry that people like we will realise that having full control over our money, will impact on them.
I will be cashing in my £35k pension in April next year. I will get approx £25k after tax, unless I can find a way to invest it without paying the tax - I will be taking advice.
As things stand unless convinced otherwise and I will listen, I will be using that £25k plus and be buying a buy to let flat. THe 'back of a fag packet sums are these'
Flat 80 - 120K Mortgage repayment interest only @4% iro £150 - £250 a month

If we go for the higher figure. in SW london the flat would rent for £800 pcm

That gives a gross figure of £550 cpm profit.

I will manage the flat it'll be near where I live and I have a network of builders electrician and plumbers to call on if required.

If I took my pension at 55 on the above amount I would get less than £100 a month. And most importantly loose all the capitol.

So for this not to be financially viable I would need to either not rent the flat - not going to happen around here, but would plan for 11 /12 months rent p/a
Or the costs of maintenance would have to exceed £5,000 in a year - yes possible but unlikely.
And then of course the property will most likely go up in value.
The truth is that putting money in property is and safe way to protect your future and most importantly get your capitol to grow.

Chrisrm777

Atush I have just read your comment in 21. I honestly do not mean to be rude but believe me if I had £220k now that would be worth £250 by this time next year just by buying property around here, let alone the rental I could get from that, iro £1,500 pcm.
As for paying tax - I haven't paid tax on the pension money yet it was deferred if you like.
Giving £220,000 to an institution to give me a derisory £500 odd pounds a month with no way of getting my £220,000 back is not something I'm too keen on.
Also the assumption that I would somehow squander or loose the money is to be honestr insulting.
With the relaxation of the pension rules I really hope that I don't need an IFA to OK me converting from a DB to a DC - how insulting having to get permission from someone with a vested interest in me not taking my money to give his /her permission for me to do it.
Anyway not just you but some more of the above comments have made me think, so thank you I will take independant advice from IFA's

Linton

Chrisrm777 wrote: »

......
THe 'back of a fag packet sums are these'
Flat 80 - 120K Mortgage repayment interest only @4% iro £150 - £250 a month

........

???Sorry - cant see how you get £150-£250/month. And 4% seems a rather low interest rate as a long term average.

xylophone

With the relaxation of the pension rules I really hope that I don't need an IFA to OK me converting from a DB to a DC - how insulting having to get permission from someone with a vested interest in me not taking my money to give his /her permission for me to do it.

http://www.pensionsadvisoryservice.org.uk/pension-reform/budget-2014



"Defined Benefit Transfers

Transfers from defined benefit (DB) schemes to defined contribution schemes will continue to be allowed (excluding pensions that are already in payment). Transfers from DB schemes to defined contribution schemes will be restricted for members of unfunded public sector schemes, although you may be allowed to transfer in very limited circumstances. Some safeguards will be put in place to protect individuals

You must take advice from a regulated adviser before transferring from a DB scheme, unless your pot is under £30,000. You will pay for the advice, unless the transfer is to a connected employer scheme or it is an 'incentivised transfer', in which case your employer will pay.
Scheme Trustees will be given guidance on how to protect their schemes funding position from the impact of transfers out."

atush

Also the assumption that I would somehow squander or loose the money is to be honestr insulting.

I never said anything like that, just that you would lose 107K on a 300K CETV by taking it as a lump sum. And yes, now you mention it, paying 107K in tax is squandering it.

And anyway, as the above post shows, you will have to hire an IFA. So get your CETV and hunt for one that will assist you if you can find one.

gadgetmind

Chrisrm777 wrote: »

The 2.5% was a estimated figure but not far off what you'd get on an annuity at 55

About 4.8% for a level annuity, less for escalating, more if you go for drawdown.

the advice above welcome as it is, seems heavily biaised towards letting someone else have control of my money giving me a small monthly income while keeping the capitol

It was? How does using drawdown (soon to be uncapped for all) from a personal pension (where you get to choose investments) and where the capital remains in your hands and can be used by spouse if you die, resemble what you've described above?

atush

Yes, drawdown the money is entirely in your control. You choose what it is invested in, how much to take, and is 100% inheritable by a spouse.

At this point TBH, you just dont seem to want to hear anything that does not support your wishes.

But honestly, we are only telling you facts, and giving you the opinion you ask for when you post on a public forum.

And you really seem to have no idea what a defined benefit pension is, and how much it is worth on the open market (not that you would get anywhere near that in a transfer value). All you can think of is property. Which would be heavily taxed.

Daniel54

Chrisrm777 wrote: »

.
The truth is that putting money in property is and safe way to protect your future and most importantly get your capitol to grow.

Leveraged BTL is much higher risk than you allow for.It is not a safe ( or tax efficient) way to protect your future and grow your capital - or at least not as safe and secure as you appear to believe.

Having a BTL alongside inflation linked and guranteed income is one thing and quite understandable.Betting everything you have on property as an investment is the opposite of safe and secure.

gadgetmind

atush wrote: »

At this point TBH, you just dont seem to want to hear anything that does not support your wishes.

Yup.

BTL isn't as rosy as the OP thinks, and DC pensions are nothing like as pants. However, what's clear is that neither are a patch on a DB pension, which is what he's already lucky enough to have!

lvader

This is a god awful idea, huge wads of cash lost in taking pension too early, taxation and transfers not to mention the risks involved in buying property. You are basically throwing away half of your pension money even before buying the property.