Pension Robbery. You can't Have Your Money

Saxonomous

I have come across what I think must be the most ridiculous situation ever on Pensions. Please bear with me in giving you a brief background.
I have never really understood Pensions and whilst I have moved around a fair bit in my career, I have just accumulated Pension pots and disregarded them. Last year I turned 60 and started to get letters from Pension funds saying my pensions were now maturing. It seems after a divorce I am now left with 3 Pensions with a total fund of around £150k - £200k. I am a reasonably senior executive these days and fairly intelligent and have all my faculties. In recent years my partner and I have dabbled in Property and so know what we are doing.
I decided it would be good to take one of my pensions which suggests on a £90k pot will pay me now the magnificent sum of c£1300 p.a. and put it to much better use. This fund will not allow me to cash in, so I have to find an IFA to advise me and transfer to a fund which will cash out. OK I thought, so I found a local reputable IFA firm and asked them to do it.
Now I understand enough to know that if I transfer, the value will be lower (although I understand values are quite high). In this case about £76k. I then get 25% tax free and pay my tax on the rest. I am a higher rate tax payer, so lucky HMRC. My simple logic is Even with tax etc I can add this to some inheritance and other capital I have and purchase 2 small houses which will yield a reasonable net rental income and probably increase in value with refurbishment. It is certainly better than any Pension investment. I should also add I am not bothered about paying tax, so I have discounted this fact.
In short I want control of some of my Pension fund to invest myself in an area I am reasonably expert in. Simple you would think!
WRONG, WRONG, WRONG. The IFA (and another separate IFA) have come back and told me that they are concerned about the taxation and a little known fact around allowances on future pensions which means I would reduce my tax free allowance on future contributions from £40k to £4k p.a.). Bear in mind I will probably only work for a further 4/5 years if that. Frankly speaking at my salary I am not bothered about some extra taxation. On this basis they are advising me against my plan and therefore will not carry out my instructions, even if I write to them and say thanks for your advice, I understand it, but just bloody do what I want.
Now I might be missing something here, but this is MY money and I want to do something positive with it. I DON'T want to buy a ferrari (personally I have had one and I don't like them, so I now have a Maserati). I just want control of my money.
Now people can you think of any other industry regulated or not that tells you we advise you to do this and we are going to stop you. I went to my bank and explained my plan and my bank manager expressed some views on how to make this work and how to utilise some savings to do it, but at no point (even if she did not like the plan), would she have been able to say. SORRY but we are not letting you use your savings in this way!!!
My question Mr Lewis (and followers) is, is this correct/possible and is there anything I can do to get what I want? as a PS - I don't want approaches from Pension Scammers etc. I am not stupid and I'll spot them from a mile off (not of course believing for one minute this site/forum might include some clever undetected scammers!)

dmelife

It!!!8217;s because your plan, devised through a lack of understanding, is mad. No one will help you do this.

robber2

Saxonomous wrote: »

I............ have never really understood Pensions.............. !)

Really the best time to teach yourself was when you started contributing however better late then never.

Probably the single most important thing you can teach yourself are the relationships between contributions, pensions and taxation. There are huge rewards available for those who make the effort. Even more so for higher rate tax payers

Rob

kidmugsy

Saxonomous wrote: »

I am a reasonably senior executive these days and fairly intelligent and have all my faculties.

Sez you.

Saxonomous wrote: »

In recent years my partner and I have dabbled in Property and so know what we are doing.

It ain't necessarily so.

Thrugelmir

Saxonomous wrote: »

I have never really understood Pensions

It is certainly better than any Pension investment.

Perhaps you should take time out to think through your plans more thoughtfully.

Prism

Saxonomous wrote: »

Now I might be missing something here, but this is MY money and I want to do something positive with it.

Thats the thing, assuming that this is a defined benefits pension, it isn't your money - yet. Once you have gone through this process then effectively it becomes yours. At that point, if you wanted to follow this scheme of yours you could likely transfer it again into somewhere that you could then cash in a pay as much tax as your hearts consent.

I'll agree with the others - the IFA's are protecting you here from yourself

dunstonh

My simple logic is Even with tax etc I can add this to some inheritance and other capital I have and purchase 2 small houses which will yield a reasonable net rental income and probably increase in value with refurbishment. It is certainly better than any Pension investment. I should also add I am not bothered about paying tax, so I have discounted this fact.

Pensions are outside of the estate and can be passed on. So, you would be paying heavy tax to cash them in, putting them into taxable investments and then having them subject to inheritance tax when passing them on.

As a taxpayer I thank you for your generosity to the state. However, your reasons are flawed.

WRONG, WRONG, WRONG. The IFA (and another separate IFA) have come back and told me that they are concerned about the taxation and a little known fact around allowances on future pensions which means I would reduce my tax free allowance on future contributions from £40k to £4k p.a.). Bear in mind I will probably only work for a further 4/5 years if that. Frankly speaking at my salary I am not bothered about some extra taxation. On this basis they are advising me against my plan and therefore will not carry out my instructions, even if I write to them and say thanks for your advice, I understand it, but just bloody do what I want.

Your plan has flaws and your assumptions are incorrect and the level of taxation is daft with the alternatives not likely to beat the pension.

its no wonder the advice is not to do it.

Now I might be missing something here, but this is MY money and I want to do something positive with it. I DON'T want to buy a ferrari (personally I have had one and I don't like them, so I now have a Maserati). I just want control of my money.

Technically, its not your money. You have a pension of defined benefits. you want to transfer out of and have a pension (which is trust and has trustees) and then you want to fully crystallise that to go on a mad plan. The money is not yours until its in your hands.

Now people can you think of any other industry regulated or not that tells you we advise you to do this and we are going to stop you.

Yes there are. However, in many cases, you are free to stick your head in the oven and turn the gas on.

I am not stupid

Many may disagree with that based on what you have typed. The protections seem to be working properly here by preventing you from doing something stupid.

. I am a reasonably senior executive these days and fairly intelligent and have all my faculties.

Perhaps you should start using those faculties and intelligence. At the moment, they seem to be turned off.

Brynsam

You certainly are confused and ranting on will do nothing to help you achieve your objectives, whether they be sensible or otherwise.

You say you can't cash in this pension and you 'understand transfer values are quite high' which suggests this is a DB scheme. You also say you 'understand the transfer value will be lower' - why would it be? Certainly not £90K down to £76K - where did those figures come from?

To move money out of a DB scheme to a DC scheme, where the transfer value is £30K plus, you need to be able to demonstrate that you have received financial advice from a suitably qualified and regulated adviser. You don't have to follow that advice; just prove you've received it. The trustees of the scheme from which are you transferring don't need to see the advice, but they will check you've received it and your adviser will need to confirm they have given it.

You can transfer to any personal pension or SIPP which will accept the money. Some will only do so if the IFA confirms it is in your interests to transfer; others won't ask for any such confirmation. From there you can access the cash, with the relevant tax charges if you take more than 25% as a lump sum.

You seem to be claiming to understand a lot of things, but unfortunately you are wrong on so many counts. Swallow your pride and find out some basic facts.

Terron

If it were a simple £90k pot you wouldn't need an IFA. Find out why it is required.

It seems that many IFAs will not act if you want to go against their afvice in case you later sue for them not advising you strongly enough not to do something stupid.

bostonerimus

While the OP's plan might be irresponsible, given the government's pension liberalization they should be able to do what they want with their pension money.

Browntoa

True , but multiple posters are questioning the OPs real level of understanding of the cost and implications of their plan

It's foolhardy to say the least