cashing in your pension

stephenwilliams

Can anybody help me on this one.????

I,ve just turned the big 50, I worked for one company for 25yrs before being made redundant, I cashed in my pension with them and had a lump sum with them no problem, but when I tried to cash in my pension with another company I,d worked for they said the trustees had stopped paying out lump sums/pensions for the time being. Can they really/legally do this.???

Is there someway I can get my lump sum from this pension company.

EdInvestor

Generally you can't cash in pensions though there are some exceptions.

From the age of 50 you can take 25% of the fund in cash and the rest as an income (which can sometimes be deferred until later). But with company pensions this often involves big penalties if the original retirement date is 60 or 65.

A company can refuse to offer early retirement - ie paying out before the retirement date. You should be OK with any private pensions.

stephenwilliams

It was simple getting a tax free lump sum and monthly pension from my first company, they could,nt be more helpful, but the other company wont budge on me cashing in pension I have with them. You say generally you cant cash in a pension, but you can.

Andy_L

There's terminology confusion here.

"cashing in" a pension is generally taken to mean getting your hands on the full value of the pension fund (in the same way you'd "cash in" an endowment/S&S ISA) rather than the lump sum/monthly payment.

Getting the lump sum and monthly payment before the age specified by the (company) scheme rules is either at the discretion of the trustees or a right under the scheme rules but with heavy penalties for taking it early

dunstonh

You say generally you cant cash in a pension, but you can.

You cannot "cash in" a pension.

Andy is probably correct in you mixing up terminology. It sounds like you want to "commence retirement benefits" or "cystalise your pension" (Gordon Browns new terminology since April 06).

EdInvestor

Perhaps the OP is referring to "pension liberation". But this is illegal and will eventually result in loss of almost all the pension.

http://www.thepensionsregulator.gov.uk/pdf/pensionLiberationFactsheet.pdf

This is not the same as "pension unlocking", which enables you to get 25% tax free cash from your fund plus an income from age 50, earlier than the scheme retirement age.This is legal but carries the risk that your pension will be cut substantially.On the other hand, it is possible that your pension could rise if income drawdown is used.

The OP really needs to clarify what he has in mind.

Retired_I.F.A.

Your looking at taking the benefits as a lump sum and a pension I presume.

Firstly I suggest you ignore the phrase "penalties" for taking the benefits early as this is a load of bull. It's not a penalty it's a reduction in the benefits that would be available at the schemes normal retirement date. Obviously they are going to be lower if your not going to pay into it for the next x number of years and take the benefits now. The formula used is usually wrote in the schemes rules and from it's booklet you could work it out yourself. However if the trustees have put a freeze on early retirement it should ring warning bells in your head as theres a good chance the scheme is underfunded. A carefully worded letter to them asking that they let you take benifits now as per the normal formula or you'll ask for a transfer value of the whole fund might be a good idea. Wether or not i'd work I dont know but if it does ask for a transfer value anyways and go seek out an I.F.A. to see if the open market can provide better than the scheme.

stephenwilliams

I did ask for a C.E.T.V, which they sent me and tried to transfer this pension into my better pension but they said I could,nt do this, they blinded me with pensionspeak which I dont understand, I am 50 and in ill health, do you think this will help if I tell them this.???

stephenwilliams

P.S.
Thanks for your reply.

jonathon_hart

If you are medically unable to work then yes, as you would be able to take ill health early retirement. You will need to go through medical examinations to prove this though. If it is a Final salary scheme then this is often done on the same terms as if you retired at the normal retirement age.

Retired_I.F.A.

As J H says but if not able to get the benefits on ill health grounds the transfer value could be put into a personal sceme and take the benefits from that straight away.

Strange that the one scheme refused a transfer value in