release funds from pension > 32 years old

itwasntme_2

Hi all,

I need some advice.

I'm 32, and have been self employed for 6 years. At the time, my father persuaded me to start a pension fund (he was horrified to find out that I didn't want to 'join the rat race' like a normal person). He offered to contribute to the pension while I started out. He did this for 4 years (god bless him), and I've been putting as much cash in as I can too. Total amount invested is probably around £18k.

My present situation: I bought a flat 3 years ago, which unfortunately swallowed all our savings and everything my wife and I have earnt since, and my wife is now expecting.

We are now thinking of emigrating to pastures new, and obviously will need as much cash as possible. Possibly more than the small amount of equity tied into our flat.

What are my options, if any, for releasing any/all funds from this pension?

Yours graciously,

One slightly petrified soon to be father.

seven-day-weekend

Sorry....don't think you can have any of it until you are 55.

There will be more expert advice around soon.

Congratulations on the expected new family member and good luck with the emigration.

itwasntme_2

Just to be clear, I'm not talking the cash + interest, just the cash put in, andpossibly not even all of it...

jem16

You cannot have any of it until age 55. At that point you can have 25% tax-free lump sum plus buy an annuity.

Once in a pension fund it is locked there until retirement and can only be used for that purpose.

EdInvestor

jem16 wrote: »

Once in a pension fund it is locked there until retirement and can only be used for that purpose.

It's really amazing how many people don't seem to realise this and end up with thousands of pounds locked away effectively forever.:eek:

dunstonh

EdInvestor wrote: »

It's really amazing how many people don't seem to realise this and end up with thousands of pounds locked away effectively forever.:eek:

It does seem strange that some people dont realise what pension means.

ManAtHome

Or you could pay higher-rate tax, employers and employees NI and get your mitts on around a third of your top line instead of taking out 25% tax free and 120% annuity value... Hmmmm think I'll keep my thousands locked away...

itwasntme_2

Once in a pension fund it is locked there until retirement and can only be used for that purpose.

see you in the bahama's when I'm 55 then ;-)

@dunstonh

It does seem strange that some people dont realise what pension means.

Pardon me for asking for pensions advice on a pensions forum. Kindly keep your pedantic comments to yourself if you haven't got anything to useful to contribute.

KLB

I honestly thought that you could take out the money that you'd put in, not all of it, but I thought that the whoever you had your pension with would take a huge chunk, but you could take some of it back.

My pension statement refers to the transfer value as at <today's date>. Does that mean the transfer value if you transfer to another pension, not what you'd get if you withdrew the money?

Tozer

Actually I think OP asked a perfectly legit question and clearly a large number of bright people are confused by it. As a matter of principle it is difficult to understand why, if the tax benefits are neutralised, you cannot surrender the policy (less charges) as you could with, say, an endowment.

In my occupational scheme I can get a refund of all contributions (less income tax credit) if I leave the company within 2 years. After that it is 'locked'. That is the only sort of exception I think.

KLB - I think the transfer value relates to what you could transfer to another pension provider.

EdInvestor

Tozer wrote: »

As a matter of principle it is difficult to understand why, if the tax benefits are neutralised, you cannot surrender the policy (less charges) as you could with, say, an endowment.

This might be appropriate for a unit linked money purchase pension but wouldn't be appropriate with final salary schemes as it would disadvantage other members of the pension scheme and the scheme provider - unless there were very large penalties, which would be seen as unfair.

In my occupational scheme I can get a refund of all contributions (less income tax credit) if I leave the company within 2 years.

You'll often find you also lose a deduction to contract you back into the state 2nd pension (SERPS).

After that it is 'locked'. That is the only sort of exception I think.

This exception undoubtedly adds to the general confusion about withdrawal, especially as many companies are now offering "group personal pensions" where the 2-year rule does not apply and you are locked in from the start.

KLB - I think the transfer value relates to what you could transfer to another pension provider.

That's correct.