Pensions how to get money out?

carboot_lover

I currently have a stake holder pension and wish to take out the value of the pension. however i am not a retirement age. Can i move this to another type of pension were i can take out the money or will i just have to leave it where it is? can anyone help

dzug

You cannot take the money out. Moving it to another sort of pension may be a possibility - but you will be faced with the same rule there - you can't take it out until retirement.

EdInvestor

From the age of 50 (55 from 2010) you can extract 25% of the value in tax free cash. But that's all.The rest must be used to supply a taxable retirement income.There is no further access to the capital.

lisyloo

There are only 3 ways your money comes out of a pensions

1) death
2) on reaching retirement age (as defined by the scheme)
3) Terminally ill with less than a year to live

Sorry, but the whole point is that the money is earmarked for retirement (or if you no longer need to pay for a retirement).

dunstonh

The tie is also there because the Govt give you tax free growth and tax relief on contributions. They dont want people spending that money on their holidays each year.

EdInvestor

It's only deferred tax though: you have to pay tax on the eventual income when you get the pension. People who pay high rate tax going in and basic rate in retirement mught benefit but there's little to recommend a pension for anyone else if yhere's no free money from an employer.

The ISA has tax free growth, no tax on money coming out and no restrictions on accessing either capital or income.

But with the pension you lose 75% of the capital forever. That idea is not very attractive to most people.

DavidLaGuardia

EdInvestor wrote: »

It's only deferred tax though: you have to pay tax on the eventual income when you get the pension. People who pay high rate tax going in and basic rate in retirement mught benefit but there's little to recommend a pension for anyone else if yhere's no free money from an employer..

25% tax Free so deferred tax is less than total amount.
+Rising age allowance may mean many do not even pay tax on a chunk of the 75%.
Do salary sacrifice and tax efficiency is even greater

EdInvestor wrote: »

The ISA has tax free growth, no tax on money coming out and no restrictions on accessing either capital or income.

ISAs are good for lump sum planning
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EdInvestor wrote: »

But with the pension you lose 75% of the capital forever. That idea is not very attractive to most people

The actual idea of a pension fund is that it it captial and gorwth you intend to spend. Hence If you have other investments or assets there is less of a need to take from these so the income can build up to leave to your beneficiaries. In addtion, if you do not need the income from them, you can make an outright gift with no coplex trust issues so they are outside the estate - all because you commited the pension cpaital to your needs. With annuity there is eventually a gamble that you lose to others, but also the security that if you die later you are the winner. Low annuity rates can also be overcome over time by going for an investment linked one.

Think outside the (your) box occasionally.

dunstonh

But with the pension you lose 75% of the capital forever. That idea is not very attractive to most people.

Although if you ignore growth, the income will return around 10% on the capital given up. That is attractive for a guaranteed for life income.

The ISA has tax free growth, no tax on money coming out and no restrictions on accessing either capital or income.

Spend the capital and your income is gone. Plus, the income rate is lower. A pension is for income provision. The ISA is for capital provision.

Paul_Herring

EdInvestor wrote: »

The ISA has tax free growth, no tax on money coming out

But it is paid with taxed income, which on this particular point, puts it on a par with pensions.

Jennifer_Jane

Is there another possible advantage to Pensions that seems to be overlooked? What is the rule about Pensions in the event that someone becomes bankrupt? Where I was a financial advisor, pensions/retirement annuities, etc, were protected, and that was a differentiating point for pensions vs other investments. Is that so in the UK?

Jen
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bomber2

when i bought my first house in august 1990 i got a morgage for £17100 over 25 years and took out a seperate endowment with standard life also for 25 years.however about 5 years ago i paid off my morgage and just carried on paying £21 a month to standard life as a kind of savings scheme.however a freind recently said i would be better off cashing in my endowment and putting the money in a high intrest account,with less than 8 year to maturity is he right,my guess is no but can anybody give me their opinions.thanks