Can I cash in a second pension?

david1154

Last year I cashed in a 225K pension. I have a small 20k pension pot I'd also now like to cash in and wondered if I can do this? Are there restrictions on cashing in more than one pot? My mission is to pay off my mortgage. Thanks for any advice.

bigadaj

david1154 wrote: »

Last year I cashed in a 225K pension. I have a small 20k pension pot I'd also now like to cash in and wondered if I can do this? Are there restrictions on cashing in more than one pot? My mission is to pay off my mortgage. Thanks for any advice.

The answer is yes, whether that's the wise thing to do is of course another matter, paying off a mortgage wouldn't normally be a good reason.

Did you really cash in a pension pot of that size, you must have paid 45% tax on some and 40% on a lot?

dunstonh

Last year I cashed in a 225K pension.

You are having us on aren't you?

Did you really cash in a pension pot of that size, you must have paid 45% tax on some and 40% on a lot?

Not only that, it would also have wiped out the personal allowance.

jamesd

Paying off a mortgage with such money is usually a bad move. But taking a 225k pot to do it is horrendously bad compounding of the financial self-harm because of the punitive income tax bill. Tax savings of the order of £35,000 would typically be available by taking the money just up to the personal allowance band and doing it over several years.

david1154

bigadaj wrote: »

The answer is yes, whether that's the wise thing to do is of course another matter, paying off a mortgage wouldn't normally be a good reason.

Did you really cash in a pension pot of that size, you must have paid 45% tax on some and 40% on a lot?

Thanks. There were personal reasons why I needed to cash the larger pot in. Otherwise, that would not be a route I'd follow.

atush

There had to have been a better way than to throw 40-45% of your pension down the swanny.

Madness.

Why not come here for help first?

Now you want to squander your 20K too? Are you still in financial difficulty? What will you earn this year? as there will be 15K to be taxed, so it could push you into a higher rate band again?

What will you live on in retirement if you spend both your pensions now? Or will you work til you drop?

david1154

Thanks, and in normal circumstances you are absolutely right. This was due to personal, health reasons.

david1154

Thanks for your reply. Please..never judge a book by its cover..every situation is different. My question wasn't about my orginal 'cashing in' . And, you're right with everything you state. But, my situation is a personal health related one. Otherwise, I would have been a bit daft to have taken that road. My question, was if I could cash in a second pension pot...

david1154

Atush... Be careful please with your replies.. Mine is a health issue, otherwise I would not have taken the route I have. Don't assume that everyone is at the same point in their lives. My question was not whether I was crazy or not in cashing in a large pot...my question was simply if I can cash in a second pot..that's all. ... Please in future think before you respond...But thanks for responding anyway!... Better that, than nothing I guess...

Malthusian

The answer to your question is yes but you can't drop a bombshell like "I cashed in a £225,000 pot" and not expect a reaction.

We have a universal health care system in this country. Was throwing 45% of your pension away really the difference between life and death?

Did it make no difference that if you had not survived your health scare, your family would have received every penny of the £225k tax free, whereas now they will get something in the region of £90-100k less than that?

The answer to your question is trivial and so by asking here we must assume you want to know whether cashing in your pension to pay off your mortgage is a good idea or not. And knowing that you have a tendency for highly self-destructive financial behaviour is a relevant factor.

PensionTech

Another point here is that this forum doesn't just answer questions for those who create threads, it answers questions for those who stumble across them too. For you to say "I cashed in a £225k pension" and for nobody to then point out the huge tax implications and financial detriment of doing that would be misleading to anyone else who might read this.

I hope the money wasn't withdrawn to pay down your mortgage. In any case, cashing in this smaller pension to pay down your mortgage is still very probably a bad idea, though it is indeed possible. I understand if you're annoyed at the tone people have taken on here. But we are genuinely here to help, and if the reaction is extreme, it is to highlight that there are much better decisions out there and MSE forums are very well-placed to help you identify them. We can tell you why cashing in a pension is a terrible way to pay down debt, and Debt-Free Wannabes can tell you what the better alternatives are (as can many people on here).