Help Needed regarding Withdrawing Early

tom.andrews_2

I'm a consultant and have just accepted a contract to work in Switzerland. There are 2 separate pension contributions, a small compulsory Swiss pension contribution that cannot be accessed until I reach retirement age.

But there is a larger contribution which works out at over 10% of my monthly wage. This will be paid into a Swiss pension fund, but I have been advised by the Swiss management company Adecco, that when I have finished the contract in Switzerland and return to the UK I will be free to transfer the funds to a UK pension fund of my choice.

I realise that I will not have access to these funds whilst working in Switzerland, but when I return to the UK in 6, 12 or 18 months time I will want to access these funds. I am free to transfer the funds to any UK pension fund of my choice so I just need to know if UK pension funds will allow me to withdraw them immediately or soon after the transfer has been made.


I realise there is likely to be some penalty for accessing these funds early, but are there any products that are aimed at people in my situation with which I will get the smallest penalty.

Any help or advice is appreciated.

EdInvestor

You can't withdraw money from UK pension funds until you reach retirement age, and even then only 25% is accessible in immediate cash.

tom.andrews_2

Is there anything I can do to realise the cash that I can transfer to a the UK pension fund early. What if I plan on retiring early, are you saying that there is absolutely no way of accessing the money. I understand I may have to pay some sort of penalty and understand this, but I don't feel it can be right that I cannot access these funds before I retire.

CLAPTON

you can access 25% if you are 50 now. after 2010 you have to wait until you are 55
do you have to contribute to the swiss scheme?

JimmyTheWig

tom.andrews wrote: »

I don't feel it can be right that I cannot access these funds before I retire.

I may be wrong, but as far as I am concerned that was what a pension was - money you couldn't touch before you retire.

Would it help if you thought of it as an extra 10% tax? It's just an annoying thing that you will have to pay. Presumably the contract is still worth it despite losing this 10%?
Then you'll get the benefit when you retire, so it will be better than having paid a tax.

EdInvestor

You might be better to leave it in Switzerland. Do local laws there allow you to access pension funds in cash?

tom.andrews_2

I'm told that in Switzerland it cannot be accessed until I reach retirement age

Dark_Pariah

CLAPTON wrote: »

you can access 25% if you are 50 now. after 2010 you have to wait until you are 55
do you have to contribute to the swiss scheme?

I think Clapton is quite right.

If you are 50 or over, you could see whether your "large" Swiss pension can be transferred to the UK (as an overseas scheme, you may find this more complex than you imagine). Once in the UK, you have a variety of options (phased income drawdown for instance) which allows you to take cash, without buying a pension as well - the only caveat is that at some point before age 75 a pension/annuity must be purchased. You can only take 25% of the pot as TAX FREE cash - you can take more cash if you like, but with a 55% tax charge on the amount above the tax free limit.

I would strongly rcommend that you speak to an IFA who has experience with overseas transfers. In my experience, a transfer in from an overseas company to the UK is very difficult and can be time consuming with you having to do a great deal of the leg work and chasing.

Retired_I.F.A.

"I would strongly recommend that you speak to an IFA who has experience with overseas transfers. In my experience, a transfer in from an overseas company to the UK is very difficult and can be time consuming with you having to do a great deal of the leg work and chasing."

I'll 2nd that. After 20 odd years mostly as an IFA I dont have a clue, (I only ever had one client with benefits in an American pension plan and I had to give up eventually trying to find out how they worked. (Pre internet days though) Even The American who did a compliance check on our firm for the F.S.A. did not have a clue).

Start at: www.unbiased.co.uk

EdInvestor

Dark_Pariah wrote: »

you can take more cash if you like, but with a 55% tax charge on the amount above the tax free limit.

Although this may be technically true I doubt it's possible in practice as it probably invokes a scheme penalty which will wipe out most of the pension and get the provider into trouble to boot.So they won't do it.

Basically, once money is in a UK pension, it's there forever, unless you die under the age of 75.That's why I asked if Swiss rules allow you to take pension funds in cash.If they do, better to leave the money there.

Might as well forget any idea of extracting all the money before retirement, it just won't happen.