Using pension for deposit?

Mikej92

Odd one..having a chat with a friend today, regarding mortgage etc.. he mentioned that he had read or been told that someone had taken money from their private pension (age 29), to pay for their deposit on the house.

This wasn’t something I’ve heard of, as I thought you need to be of age, to take any money out? 

Can anyone shed any light on this? 

_Penny_Dreadful

Mikej92 said:

Odd one..having a chat with a friend today, regarding mortgage etc.. he mentioned that he had read or been told that someone had taken money from their private pension (age 29), to pay for their deposit on the house.

This wasn’t something I’ve heard of, as I thought you need to be of age, to take any money out? 

Can anyone shed any light on this? 

I wonder if somewhere along the lines the story changed from LISA to pension.  A LISA is a type of account that can be opened by those under 40 to save for a house deposit or retirement.  There wouldn't be any penalties for a 29 year old withdrawing funds from a LISA to use towards a house deposit.

Pension release for those under 55 is an option in extreme cases such as serious life illness otherwise you face up to 55% tax on whatever you withdraw.  Some professions such as professional athlete allow an earlier retirement date but 29 seems too young even for that.

Another option would be a parent, aged 55+, retiring and gifting the 29 year a lump sum for their pension not the 29 year old's pension.

Albermarle

he mentioned that he had read or been told that someone had taken money from their private pension (age 29), to pay for their deposit on the house.

Not possible I am afraid.

GDB2222

There’s something called pension liberation, which supposedly allows people to access their pensions long before normal retirement age. It’s a scam. I’d be surprised if the OP’s friend actually received the money he expected. 

Silvertabby

GDB2222 said:

There’s something called pension liberation, which supposedly allows people to access their pensions long before normal retirement age. It’s a scam. I’d be surprised if the OP’s friend actually received the money he expected. 

If he did, then he needs to brace himself for a whopping great tax demand.  Not only in respect of any money that he may have received, but also the 'fees' that the pension liberation scammers trousered.

Or is OP's friend Australian?  Oz sometimes allows any age withdrawals to help pay for major life expenses, such as property purchase.  Which is why HMRC blocked QROPS transfers to Oz pension schemes that didn't tally with UK tax laws (ie, no early access to pension benefits on grounds other than ill health).

Mikej92

GDB2222 said:

There’s something called pension liberation, which supposedly allows people to access their pensions long before normal retirement age. It’s a scam. I’d be surprised if the OP’s friend actually received the money he expected. 

Wasn’t my friend.

i said he said he had read/heard something.

GDB2222

Mikej92 said:

GDB2222 said:

There’s something called pension liberation, which supposedly allows people to access their pensions long before normal retirement age. It’s a scam. I’d be surprised if the OP’s friend actually received the money he expected. 

Wasn’t my friend.

i said he said he had read/heard something.

Excellent. I'm glad your acquaintance has not been scammed. 

propertyrental

So someone you don't know, said something he'd vaguely heard, to someone else, who told you?

As a kid we used to play 'Chinese Whispers'. Great fun though I've no idea why it was called that - I've lived in China, and whilst it's a generalisation I'd say the Chinese tend to speak louder than us!

InMyDreams

Could it have been a small DB pension? I did this 25 years ago. I had contributed for just less than 2 years when I left work before our first was born. You had to have contributed for at least 2 years to be eligible for any benefit when you retired. As you have no ‘pot’ (like you would with a DC pension) and no benefit on retirement, you were allowed to get all your contributions back (taxed, obviously) if you left employment within the first two years. I think it still works like this, but is quite a specific situation. It’s also highly advised against for several very good reasons. But we did it and used it towards our first house deposit.

Albermarle

InMyDreams said:

Could it have been a small DB pension? I did this 25 years ago. I had contributed for just less than 2 years when I left work before our first was born. You had to have contributed for at least 2 years to be eligible for any benefit when you retired. As you have no ‘pot’ (like you would with a DC pension) and no benefit on retirement, you were allowed to get all your contributions back (taxed, obviously) if you left employment within the first two years. I think it still works like this, but is quite a specific situation. It’s also highly advised against for several very good reasons. But we did it and used it towards our first house deposit.

I think nowadays you are often allowed to transfer in to your new workplace pension, and if you do you this then you do not lose the employer contributions, which you do if you cash out.
Probably depends on exactly what scheme you are in, and joining,

Mikej92

propertyrental said:

So someone you don't know, said something he'd vaguely heard, to someone else, who told you?

As a kid we used to play 'Chinese Whispers'. Great fun though I've no idea why it was called that - I've lived in China, and whilst it's a generalisation I'd say the Chinese tend to speak louder than us!

The English reader nowadays…I said MY FRIEND had BEEN TOLD/READ.

I have then come to this forum to ask the question, as I am not far off applying myself, purely for info and insight.

Cut the sarcasm, unless you read the post correctly first.