Trivial Refund On Stakeholder Pension

RETIRED-AT-50

If you are at least 50 have never had a Stakeholder or other Pers. Pension plan(s) you may deposit approximately a maximum of £1,940 which is grossed up to £2487 by the Goverment. You need to ensure the total value of your pension pot at encashment does not exceed £2500 ensuring it is also placed into a 'cash fund' so that it is guaranteed to grow on a daily basis. Once the Cooling-Off period has expired you may instruct your Stakeholder Pension Provider to repay you all monies under 'Trival Pension' Rules and obtain 25% of the original £2487 tax-free with the remainders then taxed at 22% (for basic rate tax-payers). In essence, you invest only £1940 yet later receive £2076.79+ refund, an instant profit after basic rate tax of £136.79. I've done this myself upon reaching 50 in April 2005 and encashed my Plan a month later - and it worked a treat - this is all written up in IR76 "Pension Scheme Guidance Notes" paragraphs 9.53 - 9.56 available from the Inland Revenue.

Milarky

I'm pleased to see that this has worked in practice for you - as it only seemed to be possible in principle until now.

Can I ask - are you now starting another pension [this time to be taken in the normal way] from scratch?

As this was done under the 'old rules' [i.e. about to change] is this a 'once only' under both sets of rules, or can it be used a second time as well?

The size of the Trivial pension is to be raised to £15,000 from next April, of course. What you say works now [i.e. no other pension rights existing at 50] will be possible - but only from age 55 - on a sum 6 times as great - from then

But I doubt few people would geniunely taken advantage of this, since by age 55 many 'total pension pots' will have already exceeded £15,000

isasmurf

Milarky wrote:

But I doubt few people would geniunely taken advantage of this, since by age 55 many 'total pension pots' will have already exceeded £15,000

Not according to HM Revenue and Customs. Their statistics suggest most people have less than £10,000 in their pension pot!
Value of Personal & Stakeholder Pensions by age(pdf)

EdInvestor

The figures probably reflect the large number of small PPs funded by contracted-out NI rebates only.

The new 15k trivial total next year will also BTW include any occupational pensions.