Can I take my pension?

smart_boy

I will be 50 next year and want to take my pension. I was in a company final salary scheme for 30 years. I left the company two years ago and my pension was frozen. I have been told that whether I can take my pension or not is at the discretion of the company. Is that true? What other options do I have. I have been given a transfer value for my pension but have been told I will face losing £46,000 from the value if I take it from the scheme. Hope this all makes sense and that someone can help. I know that taking apension at 50 is probably not a good idea but I need the money.

Debt_Free_Chick

Taking your pension may well be at the discretion of the Company and/or the Trustees. However, in practice, this is normally a question of "is there any reason why they would not let you take your pension?".

One reason might be if payment of your pension earlier than expected would result in some financial cost to the fund. However, schemes normally get around that by offering you a reduced pension, which results in no cost to the fund. So I would suspect that you can take your pension early, but it will be reduced. Have you had the figures yet?

When are you 50? From 6 April 2006, the minimum age for receiving your pension is potentially rising to age 55. I say potentially, as the new age of 55 must be implemented by 2010, but individual pension schemes will decide when to raise the age.

Worth approaching the pension administrators to ask for an early retirement quote and clarification of the earliest date on which you can receive it.

HTH

dunstonh

To add to what DFC has said, the scheme booklet may show a minimum age they will consider early retirement. It may also show the penalties that would be imposed.

Assuming the retirement age of the scheme is 65, you are asking for the benefits 15 years early. Even if the trustees were willing to allow you to have benefits early, it would probably cost you a fortune in reduced income/tax free lump sum for the rest of your life.

If all else fails, transferring to a personal arrangement is an option and losing £46,000 for doing so. You would also have to find an IFA willing to do that transaction. Personally, I wouldnt touch it even if you signed a bunch of waivers confirming how much you needed the money and how much you would lose because of it. That should just show you how much you would lose because of this.

smart_boy

I realise that taking my pension early will mean a huge reduction. On the other side of the coin, who can say I'll live to a ripe old age and be able to draw on my pension?

Are there any other alternatives (buying a property) that would allow me to get some early benefits from a fairly large pension pot or do I just have to struggle financially until I'm 65 in the hope that my pension will actually be worth having and that I'll live long enough to enjoy it.

I've already seen my ten-year savings plans struggle, my endowments on the house are almost worthless and my pension seems to be in someone else's pocket with me suffering in silence.

No wonder the financial industry has such a bad name.

Surely someone out there has a plan?

dunstonh

A 10 year endowment savings plan based on old economics is a long way removed from an occupational pension scheme.

Its easy to blame the financial services industry but you say you need money. Why havent you budgeted for it? You now want to take it from a scheme that wasnt designed to have easy access as it was designed to give you a retirement income. That's not the fault of the financial services industry. You would be complaining just as much if you didnt have an income in retirement, assuming you live, which statistically is more likley. Please do not go bashing the financial services industry for lack of planning on your part. There are things that it is at fault for but you do also have to take responsibility for things yourself.

If you had bad health, the trustees would look more favourably on your request for early payment. Indeed, if it is a hardship case, they may look more favourably on it. I recently got something agreed for a client at the trustees meeting that was non-standard so it is possible. We put our case forward, they listened and agreed and we got what we wanted.

We dont know enough to help you at the moment. Am I reading that last post to suggest that you want to buy a property? Do you think that your case is justified enough for the trustees to grant you early retirment (to the detriment of other members)? Does the scheme booklet give you any information on early retirement?

smart_boy

dunstonh wrote:

Its easy to blame the financial services industry but you say you need money. Why havent you budgeted for it? You now want to take it from a scheme that wasnt designed to have easy access as it was designed to give you a retirement income. That's not the fault of the financial services industry. You would be complaining just as much if you didnt have an income in retirement, assuming you live, which statistically is more likley. Please do not go bashing the financial services industry for lack of planning on your part. There are things that it is at fault for but you do also have to take responsibility for things yourself.

Congratulations. Anything disparaging I may have said about the financial services industry has paled into insignificance compared to what you have said. Your patronising, know-all attitude says everything that I should have said.

Your assumption that I have failed to budget for my need for money is ridiculous. I have worked for 32 years, own my own home (worth £850,000) but unfortunately I was unfairly dismissed from a well-paid job which is why my pension endeded up being frozen. Because of the publicity surrounding my dismissal it is almost impossible for me to work again in my chosen profession.

As for lack of planning, frankly I'm almost !!!!!! my pants with laughter at your attituide. It was people like you I listened to when I took out successive endowments policies which are now useless. It was people like you I listened to who told me ten-year savings plans were a good idea, tax efficient, blah blah blah, bull!!!!. It was people like you who told me I had a bomp-proof, safe as houses pension.

My wife and I have done everything we could to plan for a secure financial future and still we have smart !!!!!! telling us where we've gone wrong.

My apologies for thinking I might get some worthwhile advice from anyone on here. Seems like this forum is dominated by financial advisors who are on it for what they can get. Ring any bells?

dunstonh

Congratulations. Anything disparaging I may have said about the financial services industry has paled into insignificance compared to what you have said. Your patronising, know-all attitude says everything that I should have said.

Your assumption that I have failed to budget for my need for money is ridiculous. I have worked for 32 years, own my own home (worth £850,000) but unfortunately I was unfairly dismissed from a well-paid job which is why my pension endeded up being frozen. Because of the publicity surrounding my dismissal it is almost impossible for me to work again in my chosen profession.

Perhaps you should look at your own attitude. Your first response was to blame the financial services industry. Then when a very fair and balanced response was given, you go off on a moody.

You say you were wrongfully sacked. Perhaps your attitude had something to do with it? If it was unfair, then why not seek legal advice?

Your assumption that I have failed to budget for my need for money is ridiculous. I have worked for 32 years, own my own home (worth £850,000) but unfortunately I was unfairly dismissed from a well-paid job which is why my pension endeded up being frozen. Because of the publicity surrounding my dismissal it is almost impossible for me to work again in my chosen profession.

I made no such assumption. I added a question mark to it. It is the sort of thing that a trustee would look at if your case was put before them. Have you lived beyond your means or is it a genuine case of falling on hard times? What do you want the money for?

If you cannot accept such questions being asked without making such a response, then it is pointless you even approaching the trustees.

It was people like you who told me I had a bomp-proof, safe as houses pension.

Dont presume to know me as I do not presume to know you. This is why I asked the questions.

As it happens, an occupational scheme is as safe as houses. In the same way you get well built houses and those which are falling down.

My apologies for thinking I might get some worthwhile advice from anyone on here. Seems like this forum is dominated by financial advisors who are on it for what they can get. Ring any bells?

Perhaps you would be better focused on dealing with the issues than trying to attack others who have nothing to do with you being in the situation you are in. If you dont like the responses to your questions, then dont ask questions where you may not like the answer.

What you want is the scheme to make a financial commitment at the expense of the other members. Those are the sort of questions that will be asked. If you answer them as you answered me, then don't expect the trustees to grant you any favours.

EdInvestor

Hello Smart boy

smart_boy wrote:

What other options do I have. I have been given a transfer value for my pension but have been told I will face losing £46,000 from the value if I take it from the scheme. Hope this all makes sense and that someone can help. I know that taking a pension at 50 is probably not a good idea but I need the money.

You wouldn't be the first person to find himself in an "unintented unemployment" situation well before the "normal retirement date(NRD).They don't unfortunately tell you that "normal" may not apply when you sign up for a pension and choose the NRD ( - note to other moneysavers, when asked what age you want to retire, always choose the youngest legally allowed, currently 50, to give yourself as much flexibility as possible later.).

OK, so if they've given you a transfer value, I would take the money and run off with this immediately, if you have a house worth 850k you can afford to take a 46k hit and get this pension lump sum working for you, so you can make the money back through investing it.

If it were me I would move it to a low cost online SIPP ( Self invested personal pension), taking whatever tax free cash is available on the way out. I would then put it into income drawdown, investing it so as to take an income from the yield ( investment return on the fund), leaving the capital itself to grow.[You can take more than this, which could be helpful in your current situation, but I wouldn't advise it doing it for very long, unless of course you are good at investing and your fund makes good returns - which is quite possible. ]

You may have a GMP (protected rights element) in the fund which could cause a complication as SIPPs can't take protected rights money.A SIPP provider called "EPML" will take PR money, though it can only be put in cash. It can also be put into a separate stakeholder pension at a life company.

Execution only low cost SIPP providers like Sippdeal, EPML and Alliance Trust should accept your fund without problems. The Motley Fool website https://www.fool.co.uk has a good forum on SIPPs where people could give further help.

Post some info on your endowments and we can see what to do there

Insurance company
Guaranteed sum assured
Total bonuses
Surrender value
Monthly premium
Maturity date

Sorry to hear about the job and cashflow problems, this can easily cause frustration,stress and panic, I know, but it can usually be sorted

smart_boy

Dunstonh, Again, loads of assumptions and incorrect statements. Of course I sought legal advice regarding my sacking. They settled out of court. Nuff Said.

Living beyond my means? Haven't had a holiday for 3 years. Car is six years old.

But why do I need to justify my situation to you. As I said, you make your money out of the gullibility of others.

As you've made plenty of assumptions about me, allow me to make one last assumption about you. Rearrange the following words "!!!!!! own your up"

smart_boy

Editor, thanks for your excellent post. Seems like some good advice. I'll look into your suggestions ASAP. Many thanks once again

dunstonh

His suggestions are also clearly bad advice as well. Transferring an occupational pension into a SIPP when you clearly do not have a proper understanding of financial products is a bad move. However, its your money and at least you wont be able to blame the financial services industry when you mess it this time.

But why do I need to justify my situation to you. As I said, you make your money out of the gullibility of others.

Anyone who knows about occupational pension schemes and reading this thread will clearly see who the gullible one is in this thread. You seem to prefer the incorrect information from Editor because of your personal dislike of those who do know what they are talking about.

Still, continue the flaming if you wish. I will still be here helping others long after you have lost tens, if not hundreds of thousands of pounds by not seeking professional advice.