Taking cash from pension early

Menovaur

I work for local government and have a work pension. I am over 55. I'd like to explore the option of taking a tax free lump sum from my pension pot, which is over £30,000.

I've read a lot of info but am confused about what happens to the remainder of my pension. Can it stay in my works pension fund?

xylophone

Are you a member of LGPS seeking early retirement?

http://www.lgps.org.uk/lge/core/page.do?pageId=157961

Menovaur

Hi, no, I can't retire until I'm 66 as I have a mortgage.

jem16

Menovaur wrote: »

I work for local government and have a work pension. I am over 55. I'd like to explore the option of taking a tax free lump sum from my pension pot, which is over £30,000.

I'm assuming you mean the tax-free lump sum is over £30k as opposed to the pension pot? There is no pension pot with the LGPS.

I've read a lot of info but am confused about what happens to the remainder of my pension. Can it stay in my works pension fund?

You cannot take your lump sum without taking your pension.

Your pension may be affected if you return to work.

Menovaur

Jem, I am very clueless to be honest. I thought I could draw the 25% as a lump sum and leave the rest in the LGPS as I will be working for another 8 years. What are my options?

Menovaur

The lump sum isn't as much as £30,000

jem16

Menovaur wrote: »

Jem, I am very clueless to be honest. I thought I could draw the 25% as a lump sum and leave the rest in the LGPS as I will be working for another 8 years. What are my options?

Your only real option is to retire and apply for your pension.

Another option is to transfer your LGPS pension to a defined Contribution pension and then wait till April when you could withdraw the 25% and leave the rest invested. However this would be a very bad financial decision and should really be avoided.

Menovaur wrote: »

The lump sum isn't as much as £30,000

So what is the lump sum that you are talking about?

The LGPS is a Defined Benefit scheme. There is no pot of money. Instead on retirement you will received a defined set of benefits based on your length of service and salary. These benefits are guaranteed unlike Defined Contribution schemes where there is a pot of money and it is invested in the stockmarket.

Menovaur

I really have misunderstood the whole unlocking process. I can't afford to retire sadly as I have a mortgage with 7 years remaining.

Menovaur

I'm loving the Newbie Alert, is there a Complete Donut Alert?

jem16

Menovaur wrote: »

I really have misunderstood the whole unlocking process. I can't afford to retire sadly as I have a mortgage with 7 years remaining.

There's no such thing as unlocking your pension - it's just a made up term.

Different types of pensions have different rules - you just have to find out what applies to your pension.

Might be a good idea to read up on the LGPS.

http://www.lgps.org.uk/lge/core/page.do?pageId=157961

atush

Anyone who says to you

"unlock your pension"

Should be avoided and thrust away with the nearest barge pole. Illegal so costly if you should agree to do it?