Make money from a pension?

David_Lindon · 2 March 2008 at 6:44PM

I'm 20 years old and have just been asked if I want to join the company pension scheme. The scheme is with scottish widows - am I right in thinking the following is possible:?

If I were to contribute a large amount, say 500GBP and my company matches the amount so thats 1000GBP bein added per month. After 5 years, can I then 'cash in' my pension and receive 60,000 as a lump sump and pay a chunk off the mortgage :j? I'm sure the lump sum would be taxable but in theory, is it possible to do something like that? I've been reading about SIPPs and people say you can 'transfer' a company pension into a SIPP and then cash it in to receive the money from it.

EdInvestor · 2 March 2008 at 7:00PM

David_Lindon wrote: »

After 5 years, can I then 'cash in' my pension and receive 60,000 as a lump sump and pay a chunk off the mortgage :j? I'm sure the lump sum would be taxable but in theory, is it possible to do something like that? .

No.You can't cash in pensions.

The most you can get out is 25% at the age of 55, unless the pension is very small (under 17k or so), in which case you can get it out at age 60, paying tax on 75% of it, providing you have no other pensions.

If you think you might need the money later, DON'T PUT IT IN A PENSION.

Put it in a stocks and shares ISA instead.

averageguy11 · 2 March 2008 at 9:10PM

50 up until 2010 i think

dunstonh · 2 March 2008 at 9:14PM

It wouldnt be called a pension if you could draw it before a sensible retirement age. The Govt give tax perks to employers and employees as well as tax free growth to encourage people to invest towards their retirement. Not to draw out before then.