Is there any way to access pension early

Marcon

One possibility of course could be to continue working and earning...! The possibilities being discussed here do seem to be pretty far fetched when that is surely the simplest?

QrizB

Marcon said:

One possibility of course could be to continue working and earning...! The possibilities being discussed here do seem to be pretty far fetched when that is surely the simplest?

Working on reduced hours if needs be. Three days a week for a few years might be a nice glide slope into retirement! (I'm just starting that myself )

Pat38493

QrizB said:

Marcon said:

One possibility of course could be to continue working and earning...! The possibilities being discussed here do seem to be pretty far fetched when that is surely the simplest?

Working on reduced hours if needs be. Three days a week for a few years might be a nice glide slope into retirement! (I'm just starting that myself )

Or changing jobs to something with lower hours and/or less stressful.

Further other issue with the divorce option are that the court who has to sign off the divorce, might ask awkward questions about assets, houses and so on, and insist that the house be sold and split and suchlike - the court doesn't just have to accept whatever the couple agrees on if they don't think it's in one or other of their interests (the court will assume that they are really divorcing and they both need adequate future life provision).

On the other hand as pointed out above if they are a couple with a lot of assets, getting married, even if only for non romantic reasons, can avoid a heck of a lot of inheritance tax if one dies early.  Lots  of people get married soon after engaging a financial adviser!  If they were already married this would be yet another argument against the divorce wheeze - if one of them drops dead while they are "technically" divorced, massive IHT bill.

As mentioned by sarahspangles above, another way to speed things up might be that if OH is still working and older, OH pays almost all salary into pension.
- If one of you dies 

hugheskevi

In case it helps, I have a similar issue. I plan to retire at about age 48, but I want the tax efficiency of pension contributions rather than building up ISAs from heavily taxed income.

To achieve that, I have taken out a fee-free offset mortgage, which will be fully offset until I run out of non-pension financial assets. Then, I will start using funds from the offset account around the age of 53 or so, taking my pension at age 55 (protected minimum pension age). Funds from the tax-free lump sum from the pension can either repay or fully offset the mortgage.

That will enable me to effectively access my pension prior to the minimum pension age. Although there will be interest incurred, there should also be growth on the pension, and the growth plus the tax efficiency should comfortably cover the interest incurred.

Cobbler_tone

If there is a real life example of anyone divorcing (and staying together) for financial gain I’d love to see it.
Marriage on the other hand….its the way we are going, purely to secure our significant spousal pension provisions. I guess a civil partnership may save the cost of a ring. 

theoretica

[Deleted User] said:

theoretica said:

My understanding is that you can often access a SIPP early - but face considerable taxation to do so. 

No, that is wrong.  You can't legally do that.  If you do it though a dodgy scheme then there is considerable taxation on both you and the SIPP provider.  Anyone selling you a scheme that purports to allow you to get the money out early is a scam and should be reported to the FCA. 

Which law?  eg https://www.pensionbee.com/uk/pensions-explained/pension-withdrawal/early-pension-release

theoretica

[Deleted User] said:

theoretica said:

[Deleted User] said:

theoretica said:

My understanding is that you can often access a SIPP early - but face considerable taxation to do so. 

No, that is wrong.  You can't legally do that.  If you do it though a dodgy scheme then there is considerable taxation on both you and the SIPP provider.  Anyone selling you a scheme that purports to allow you to get the money out early is a scam and should be reported to the FCA. 

Which law?  eg https://www.pensionbee.com/uk/pensions-explained/pension-withdrawal/early-pension-release

Section 165 FA 2014 sets out "Pension rule 1".  Section 153 FA 2014 requires the scheme administrator to make a declaration that the instruments (or agreements) by which the pension scheme is constituted do not entitle any person to unauthorised payments. On the assumption that the scheme administrator has been truthful and ensured that the drafting is appropriate, if a scheme administrator permitted the making a payment to someone under normal retirement age (as defined, and absent the ill-health condition being met immediately before the individual became entitled to a pension under the pension scheme) will have (i) breached trust law by ignoring the trust deed, (ii) breached contract law by ignoring the contract law, and/or (iii) acted fraudulenty. 

Thank you - strange that several pension websites say it can be done, with 55% taxation.  Presumably copying from one which said it first! 

Silvertabby

theoretica said:

[Deleted User] said:

theoretica said:

[Deleted User] said:

theoretica said:

My understanding is that you can often access a SIPP early - but face considerable taxation to do so. 

No, that is wrong.  You can't legally do that.  If you do it though a dodgy scheme then there is considerable taxation on both you and the SIPP provider.  Anyone selling you a scheme that purports to allow you to get the money out early is a scam and should be reported to the FCA. 

Which law?  eg https://www.pensionbee.com/uk/pensions-explained/pension-withdrawal/early-pension-release

Section 165 FA 2014 sets out "Pension rule 1".  Section 153 FA 2014 requires the scheme administrator to make a declaration that the instruments (or agreements) by which the pension scheme is constituted do not entitle any person to unauthorised payments. On the assumption that the scheme administrator has been truthful and ensured that the drafting is appropriate, if a scheme administrator permitted the making a payment to someone under normal retirement age (as defined, and absent the ill-health condition being met immediately before the individual became entitled to a pension under the pension scheme) will have (i) breached trust law by ignoring the trust deed, (ii) breached contract law by ignoring the contract law, and/or (iii) acted fraudulenty. 

Thank you - strange that several pension websites say it can be done, with 55% taxation.  Presumably copying from one which said it first! 

Calling it 'taxation' is a bit misleading.  It's actually a 55% fixed penalty for an unauthorised withdrawal of pension funds.  

Beddie

This is the reason pensions are not so clear cut as the "best" way to save, as often stated on here. Yes, they have a tax advantage over ISAs, but the lack of early access can be an issue. 

The best method, of course is to pay money into both. That way you have both tax efficiency and flexibility.

AlanP_2

Beddie said:

This is the reason pensions are not so clear cut as the "best" way to save, as often stated on here. Yes, they have a tax advantage over ISAs, but the lack of early access can be an issue. 

The best method, of course is to pay money into both. That way you have both tax efficiency and flexibility.

Best is subjective and will vary from person to person and situation to situation.

Pensions are best in terms of financial benefits through the tax relief but not the best in terms of easy access - horses for courses.