Making Pension Available as Cash

Debt_Slayer

Hi, happy new year to everyone.

I have a pension with Scottish Widows and the money thats in there would clear much of my debt and start me off to a great start this year.
I was just wondering if there is any way i can make this money available so i can use it to pay off my debts, its the closest thing i have to savings.

I've heard you can switch to another pensions company whose policy differs. At the moment i'm due to retire at 60, but if i switched could i lower my retirement age thus making my pension available to cash in?

I'm just not really sure where i stand on any of this, nothing was explained when i took it out, it was a foreign language to me at the time.

Thanks for your help in advance.

dunstonh

I've heard you can switch to another pensions company whose policy differs.

That is not correct. Pension legislation is the same for all providers.

At the moment i'm due to retire at 60, but if i switched could i lower my retirement age

Scottish Widows, like most providers, dont enforce the selected retirement date. You are free to commence benefits between age 50 and 75. Only if there are guarantees on the plan or you have a section 32 buy out bond are you going to lose out (this applies specifically to scot wid who standardised their legacy plans to match at least stakeholder rules a few years back. Other companies may differ in case anyone else is reading).

thus making my pension available to cash in?

You cannot cash it in.

nothing was explained when i took it out, it was a foreign language to me at the time.

Its not difficult. You put money into a pension which the Govt adds to with tax relief. When you get to retirement, the value of the pension is turned into an income for life.

If you are aged over 50 you can take 25% from the pension (once only as you dont get a second bite on that particular amount regardless of what it grows to). You wont be able to do that with Scot Widows and there are risk warnings involved in doing it. If you are aged over 60 and all your pensions are worth less than £16k then you can take the whole amount as a lump sum subject to a tax penalty.

Debt_Slayer

That's a shame, i wished i'd have known that in the beginning. I'd have invested half in the pension and half in ISAs and savings.

Well, back to the drawing board then.

Thanks very much for your help. Much Apprecieated.

dunstonh

That's a shame, i wished i'd have known that in the beginning. I'd have invested half in the pension and half in ISAs and savings.

ISAs are unlikely to have been available as they were introduced in 1999 (I assume you started your pension before that). You would also have a lot less as the value as savings and ISAs dont get tax relief which could have been as much as 40% depending on your circumstances and when you paid the money in.

Cash ISAs and savings are not suitable for long term retirement planning.