Pension liberation....

Could_be_worse

Morning.

Firstly please don't judge me but I'm looking to release a lump sum from my pension via pension liberation. I have my reasons. I understand a lot of you will be wanting to warn me against this etc, etc Please don't. Like I say, I have my reasons so I'm looking help and advice on how to do this the best way possible. I'm aware of the tax bill and fees that are involved. I'm aware that my pension will not be a pension in my retirement but I've already this covered.

(1) Will my actual pension provider release a lump sum without the need for the use of a 3rd party?

(2) Is there any reputable (I use the term loosely) pension liberation firms?

(3) Is the 55% tax paid on the lump sum and on any applicable fees? If I receive X as a lump sum and Y is fees charged, I pay 55% on X plus Y?

(4) Is this tax paid from the pension at the time of release?

Thank you for reading.

xylophone

Read

https://www.thisismoney.co.uk/money/pensions/article-2364216/What-pension-liberation-risky-grabbing-retirement-pot-early.html

Pension liberation (also known as pension loans) describe a way of releasing pension funds pre-retirement, usually before the age of 55, and converting it partly or entirely to cash.

The schemes are offered by companies that make money by charging you a fee or by taking cash direct from your savings, which may be as much as a third of the value of your pension pot.

People who access their pension early sometimes assume this fee includes tax and that their tax liability has been paid - this is not the case.

Tax will be charged at 55 per cent on the entire amount - including the fees - so you'll probably be liable for a bill from the taxman of more than half the money you receive.

https://www.gov.uk/guidance/pension-schemes-and-unauthorised-payments

(1) Will my actual pension provider release a lump sum without the need for the use of a 3rd party?

Given the rules and complexities? What do you think?

NoMore

Pension liberation
Unscrupulous firms are using misleading information to promote personal loans or cash incentives and enticing savers to unlock their pension pots early. Very often these firms say there is a legal loophole they can use so you don’t pay tax. There is no legal loophole and these transactions are unauthorised payments.

A pertinent quote from xylophones second link

kuratowski

The scheme administrator must pay the scheme sanction charge

This bit is important too. It means not only do you get hit by a 55% tax charge, the pension provider gets hit by a separate penalty from HMRC. That's why the answer to question (1) will be no.

atush

There has to be a better option for you, even bankruptcy over using a pension liberation scam. As they are all scams. No matter what your reason is, it isnt good enough.

Find another way to get out of your situation.

Dox

Could_be_worse wrote: »

Morning.

Firstly please don't judge me but I'm looking to release a lump sum from my pension via pension liberation. I have my reasons. I understand a lot of you will be wanting to warn me against this etc, etc Please don't. Like I say, I have my reasons so I'm looking help and advice on how to do this the best way possible. There is no viable way, never mind a 'best' way. I'm aware of the tax bill and fees that are involved. You aren't, or you wouldn't be thinking of doing it. Do you realise that after tax and fees you could actually be left owing more than you liberated? I'm aware that my pension will not be a pension in my retirement but I've already this covered.

(1) Will my actual pension provider release a lump sum without the need for the use of a 3rd party? No

(2) Is there any reputable (I use the term loosely) pension liberation firms? No

(3) Is the 55% tax paid on the lump sum and on any applicable fees? If I receive X as a lump sum and Y is fees charged, I pay 55% on X plus Y? and fees....

(4) Is this tax paid from the pension at the time of release? May not be enough to pay the tax and you could well get a follow up letter from HMRC months down the line with a hefty tax bill...

Thank you for reading.

Not judging you or advising you not to do it; just suggesting you acquaint yourself with the reality. Have a read: https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/pension-liberation-plans

xylophone

OP, are you willing to share your reasons for considering this step?

Other posters might be able to suggest a better way forward.

jamesd

Could_be_worse wrote: »

I'm looking to release a lump sum from my pension via pension liberation.

Do any of these apply:

1. aged 55 or older
2. told by doctor that life expectancy is not more than 12 months
3. medically unable to do your normal work again

If so, these are lawful circumstances in which you can get the money.

Could_be_worse wrote: »

(2) Is there any reputable (I use the term loosely) pension liberation firms?

It's illegal, so you'll be relying on financial criminals to act properly. The most likely result is them keeping ALL of your money and you still having to pay the tax charge anyway. There aren't any reputable pension criminals.

SonOf

(2) Is there any reputable (I use the term loosely) pension liberation firms?

It is illegal. How on earth can you be reputable when you are scamming the consumer?

Aretnap

You seem to have fallen for the misconception that you are allowed to withdraw money from your pension early if you pay a tax charge. You are not. You cannot withdraw from it until you are 55 (barring some specific, unusual circumstances) - the tax charge is just the punishment if you do somehow manage to make an illegal withdrawal. So the logic is along the same lines as saying that you are allowed to park on a double yellow line if you pay £60 - or that you are allowed to kill people if you don't mind going to prison.

And the big difference between making an early withdrawal and parking on a double yellow line is that you will need help to withdraw money from your pension. Ask any reputable pension provider if you can withdraw money today and they'll tell you (politely) to get stuffed - you're asking them to do something which is illegal. Anybody who does help you make an early withdrawal is, by definition, a criminal - so to make the withdrawal you will have to entrust your money to a criminal. You shouldn't need to be told how that will end, but for avoidance of doubt a likely outcome is that you end up with no pension AND a large tax bill. However bad your current situation might be, that will only make it worse.

I know you said that you didn't want us to dissuade you, but the truth is that there is no good way to do this, so the only answer anyone can give you is "it's a terrible idea".

xylophone

Illegal? There is some nuancing required? See below.

https://www.moneyadviceservice.org.uk/en/articles/pension-release-or-pension-unlocking

Accessing your pension before you’ve reached the age of 55 is not illegal. But unless you are covered by some very specific circumstances, it’s not advisable because there will be substantial charges from the company or third party acting for you and this is seen as an unauthorised payment by HMRC and you will be hit with a 55% tax bill on the amount you withdraw.


https://www.moneyadviceservice.org.uk/blog/the-dangers-of-pension-release

Some companies are now specifically targeting the under-55s, telling them they’re able to access their retirement fund.

While this is not necessarily illegal, it is an unauthorised payment from your pension (apart from two very specific exceptions) and therefore it should certainly be avoided because you will end up losing a lot of money.

https://www.lovemoney.com/news/20989/suspected-pension-liberation-fraudsters-arrested

Pension liberation isn’t illegal, but it becomes illegal when someone isn’t given the right information or is misled about the tax consequences.

Many of these criminals approach savers without informing them of what will happen to their cash after the money has been withdrawn. They also charge a huge fee for the service.

http://www.actuarialpost.co.uk/article/tackling-pension-liberation-fraud-5925.htm

Pension liberation is not illegal, but it is sometimes part of a scam to cheat scheme members out of their benefits. It can be highly damaging to individuals, pension schemes and society generally and all of those involved in managing and advising pension schemes can help protect against it. Accessing pension scheme assets early, typically before age 55, is legal, provided the relevant tax penalties are paid, and this is where the problem begins. Pension liberation is not just about taking cash early – it is really about getting access to all of a member’s funds, and in the worse cases, stealing them.