Pension withdrawal under 55

desperate_times

I have a smallish old occupational pension and wondering about taking the money out. I know this is not allowed under 55 in most cases and I have seen articles saying such withdrawals would be taxed at 55%. However, has anybody actually been able to do this? About to contact pension provider to see but wondering if any experience of this. I know it sounds crazy but actually I would be prepared to pay 55% if it was possible (no comments needed telling me this is crazy as I have my reasons)

MallyGirl

Unless you have a terminal disease with less than 12 months life expectancy - which I hope you don't - then this is a non-starter

desperate_times

No I don't. Yes I saw that this is one situation that makes it possible tax-free (well perhaps in line with normal over 55 tax rules) along with various long-term health issues that make work impossible. But I am wondering how do some people end up paying 55% tax on an unauthorised withdrawal if it is impossible to do?

MallyGirl

They pay over a large chunk of fees and risk losing the lot - https://www.moneyadviceservice.org.uk/en/articles/pension-release-or-pension-unlocking#withdrawing-your-pension-under-age-55

desperate_times

So pension provider will pay money to one of those companies and report transfer to HMRC so they can claim tax but won't do the same direct I guess.

xylophone

You mention that this is an old occupational pension.

Is there a protected pension age under age 55? You could check.

Otherwise you will need to wait.

Silvertabby

As has been said, there are only 2 ways you can access your pension before 55. One is serious ill health, the other is a protected pension age of 50.

The reference to 55% 'tax' on unathorised withdrawals is misleading, as it isn't an official tax band as such - more a penalty for breaking the rules. Legitimate pension schemes won't allow you to take your benefits early (subject to this 'tax') because they, too, would have to pay a penalty. Dodgy schemes which offer this 'service' are more likely to leg it with all of your money - leaving you to pay the 55% penalty on money you never received.

desperate_times

Thanks I didn't realise penalty on provider as well. In the process of checking if protected age of 50. I had another pension from around the same time that was 50 so fingers crossed.

dunstonh

HMRC hit people who have breached the pension rules with a 55% tax. However, the scammers that have facilitated the withdrawal usually end up taking virtually the whole pension with them. So, you get hit with a double whammy.

In the process of checking if protected age of 50. I had another pension from around the same time that was 50 so fingers crossed.

Virtually all pensions were a minimum of 50 until legislation changed and made it 55. Only an extremely tiny number have protections for age 50.

xylophone

I had another pension from around the same time that was 50 so fingers crossed.

Have you (and spouse) checked your state pension situation? Are you both now working/paying or being credited with NI?

https://www.gov.uk/check-state-pension

Having looked at your previous posts (selling home to ease financial situation), credit card debt etc, do you need to consider debt advice?