Can I cash in my pension?
Comments
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Most personal pensions can now only be taken at age 55, it used to be 50.
you fear the worst? What Your health? The ecomony and markets? If the latter, you can change the investments to something less volatile ike cash or bonds, but then you would 'lock in' any current losses.0 -
Coming from a SIPP background its possible to do anything with the right (essentially depressing) circumstances. It just has to be approved by BMLRO of the trustee and agreed by the revenue (in some cases if not most)
First of all you have the new flexible drawdown option (not so depressing), which will allow you to "cash in" your SIPP but only with evidence that you are receiving £20k plus income from somewhere else. If your in financial difficulty, this isnt going to help you
Another option is only on a concession basis, depending on personal circumstances (bankruptcy, widowed, passing away in under a year). I believe this to be a trivial commutation payment. You can only take your entire pension pot as a lump sum if it is below 1% of your standard lifetime allowance, or £18,000.
When you take (or trivially commute!) your pension pot the first 25% will be tax-free; however, you will have to pay income tax on the remaining 75%.. I would approach the compliance department or director of the company to discuss your personal matters and they maybe able to come up with a solution, but can be rare. Plus your pot has to be pretty small!
In my experience "unauthorised payments" have been made under very special circumstances (bankruptcy or early death) and if you do manage to have this agreed your looking at a very ....very high tax charge. Please dont quote me on this but your looking at something between 60-70%?!?
There maybe other options, but I only have my experience to go on so excuse me If ive missed something.0 -
AccountExec wrote: »
In my experience "unauthorised payments" have been made under very special circumstances (bankruptcy or early death) and if you do manage to have this agreed your looking at a very ....very high tax charge. Please dont quote me on this but your looking at something between 60-70%?!?
Death doesn't give rise to an unauthorised payment charge.
Death before retirement means non protected right monies are paid out as a tax free lump sum, protected rights money as an income (from memory that difference still exists).
The situation on death after retirement depends on the option, e.g. annuity, income drawdown etc, that you have chosen. However if you are in income drawdown and the beneficiaries elect for a lump sum the tax charge is 55%.
The Canny SaverAlways looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.0 -
There is indeed a way to draw out your pension.
Until recently I was under the impression that any of the schemes
available were flawed, and did indeed leave people to be broken, taxed and kicked around by HMRC.
It is possible to withdraw up to 85% of your fund, the only requirement is that you have at least £60,000 available.0 -
There is indeed a way to draw out your pension.
Until recently I was under the impression that any of the schemes
available were flawed, and did indeed leave people to be broken, taxed and kicked around by HMRC.
It is possible to withdraw up to 85% of your fund, the only requirement is that you have at least £60,000 available.
Incorrect.0 -
There is indeed a way to draw out your pension.
Until recently I was under the impression that any of the schemes
available were flawed, and did indeed leave people to be broken, taxed and kicked around by HMRC.
It is possible to withdraw up to 85% of your fund, the only requirement is that you have at least £60,000 available.
Realistically the only way to extract money from a pension ahead of retirement involves leaving the UK for 5 complete tax years and utilising two types of offshore pensions together with a lot of charges for the privilege. Not something within the realm of possibility for most people, and certainly not cost effective in the majority of cases either.I am a Chartered Financial Planner
Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.0 -
There are some other ways, things like buying a leveraged long investment outside the pension and leveraged short inside. No net gain or loss but if you get the direction right the effect is a transfer of money out of the pension. Get it wrong and it goes the other way. And there is some gain or loss due to costs and inefficiencies of various sorts. Such things could still be useful or appropriate for some people. But mostly those who already know what the terms I've used mean and could do it themselves without help, since no external help is required.0
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There are some other ways, things like buying a leveraged long investment outside the pension and leveraged short inside. No net gain or loss but if you get the direction right the effect is a transfer of money out of the pension. Get it wrong and it goes the other way. And there is some gain or loss due to costs and inefficiencies of various sorts. Such things could still be useful or appropriate for some people. But mostly those who already know what the terms I've used mean and could do it themselves without help, since no external help is required.
I suppose the nice thing about that plan is that if you get it really wrong, at least your pension is protected against the possible bankruptcy!
I'd also considered the possibility of buying long AND short options on the same security inside and outside the pension. If the market then moves in either direction, you can extract money from the pension into your pocket. Unfortunately if the market doesn't move before the exercise date, you lose all the associated fees, which can be really quite hefty for options.
Ultimately I think it's easier to work with the assumption that it doesn't work.I am a Chartered Financial Planner
Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.0 -
There are times when the markets are more predictable than others but even so it's definitely not for most people.0
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Many thanks for the response Aegis and Proxy, It's an opinion and you are more than entitled to it.
I have often found that wealth creation is so rarely about having enough money to start, or not
having the right opportunities, but in fact mindset! Rather than shooting something down before having an idea of what something is, perhaps a more open minded response would be to ask exactly what it is first, and then look into it, before making a decision?
For those of you that are interested, i will explain a little bit about it...
Under normal circumstances you are correct as HMRC have bounced the PRP plans, but this is NOT a pension reciprocation plan- there is only one company that is Finance Act 2011 approved as it uses statute law via commercial purpose trusts- therefore by changing the environment it is held under and creating a surplus within a trust structure that has been around for 20+years, (one that is known and accepted by HMRC and House of Lords which has NEVER been taken to first level tribunal) you are able to liberate the value to a tax free environment and invest in any arena.
Hopefully this sheds a little more light on it for you.0
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