Pension to Mortgage Deposit

Chris7085

Hi,

Im curently in reciept of an Armed Forces Pension and for the last 9 years I have been paying into my employers pension scheme. Now that I'm 55 I would like to use my employers pension as a depoit to buy our own home. Is this allowed and what penalties would I incure.

Kind regards

Chris

OldBeanz

Depends on the pension scheme you are in. Do you know if it is a Defined Benefit pension like your Military pension or is it Defined Contribution where you end up with a pot of money? Will you rely on this pension once you retire? There will be more questions thereafter. 

NottinghamKnight

Assuming you have a defined contribution scheme then you should be able to access the whole of your pension at 55. The problem is that if you draw it all then 25% is tax free, the rest is added to your earnings and tax paid on the total, so you could be paying 40%+ tax on a larger sum. You would then be limited to a maximum of £4000 per year maximum contribution in future. 

Albermarle

If it is a standard DC scheme you can take it at 55 and do what you want with it . However as already mentioned if you take it all at once you may well get hammered with income tax . You can take the first 25% tax free though.

Chris7085

Many thanks for the replies, it is a DC scheme I was just looking for conformation about the tax implecations which you have confimed.

[Deleted User]

There may be employer contribution implications. My DC scheme allow you to take the 25% but then the employers contribution goes down 90%.