Cashing in pensions at 45.

[wildcat45]

I'm guessing the answer is going to be no.

Before I go and get one to one advice, I thought I'd ask here.

I have about 200k in two pensions I no longer contribute to, I already own my home outright and have no significant debt.

200k in a frozen pension isn't really going to bring me much in the way of income.

It could however buy me a very nice property outright in a place I really like. Somewhere to spend great holidays in. Somewhere to rent out as a holiday let, or somewhere to let out on a longer term basis.

I am guessing there is some reason why this is not possible otherwise everyone will be doing it.

If it's an age thing, what age could I consider it?

If it's a terribly stupid question/idea, sorry.

[Defcon5]

Wouldn't you get taxed at the higher rate if you did that?

Edited by Defcon5 on Saturday 2nd July 15:30

[wildcat45]

I am assuming stuff like this. But don't know. Turning 200k into 100k or something that makes it unworkable or everyone would have second and third homes.

[Rostfritt]

Defcon5 said:

Wouldn't you get taxed at the higher rate if you did that?

Yup. The 200k is not all yours and you can't take it for another 10 years. If you were 55 and wanted to take the lot, the first 25% would be tax free. You would then pay regular income tax on the rest. Assuming a current salary of 30k (I guess you might earn significantly more considering you have that much in your pension) and you would end up paying 63k in tax. So would only end up with about 140k to spend.

[wildcat45]

Thanks. As I thought. A nice idea while it lasted. Tyre/wall kicking on rightmove

[Simpo Two]

The wonder of pensions. But isn't the £200K invested in something and therefore hopefully growing in a 'tax-free environment'?

[Jockman]

Simpo Two said:

The wonder of pensions. But isn't the £200K invested in something and therefore hopefully growing in a 'tax-free environment'?

One would hope so, Simpo.

A lot depends on asset class and charge structure.

[Backtobasics]

No you can't, think there are some exceptions such as professional footballers (could be wrong), maybe terminal illness too. But I guess you'll need to wait until 55

[caziques]

Have a look at a SIPP.

http://www.hl.co.uk/pensions/sipp/what-is-a-sipp

Just put my three pensions into one SIPP, but it was for different reasons (59 and living overseas).

You will be able to take money out from age 55.

[Simpo Two]

caziques said:

Just put my three pensions into one SIPP, but it was for different reasons (59 and living overseas).

You will be able to take money out from age 55.

As I understand it you can take money out from a personal pension at 55 whether it's a SIPP or not.

[Welshbeef]

£200k would roughly give you £6,700 inflation linked and with spousal pension if you die and she survives you.

Not an insignificant income.


Add on State pension and your up to what £14k a year pension + you still have 20-25years of work to go to build more pension. So a pretty decent retirement considering most don't even have a pension you'll be at least twice as well off as joe blogs.

[Ozzie Osmond]

First up - there are no stupid questions.

Secondly, £200k in pension at age 45 is a good place to be. Investment growth over the next 15 to 20 years should give you a nice top-up over and above state pension.

Depending on what the pensions are I'd be looking at merging them in one SIPP and get some decent investments working for you.

Under current rules you can't access pension before age 55. However, growing tax free should easily outperform buying a second home where you will be subject to Stamp Duty, Capital Gains Tax and all the running expenses.

[wildcat45]

Cheers for all the advice. I appreciate it.

[mybrainhurts]

Backtobasics said:

No you can't, think there are some exceptions such as professional footballers

Oh, good, glad someone's looking after the poor lads.

[audi321]

I'm a bit late to the thread, but no you cannot do this. And do not entertain anyone who claims they can do this for you. This is an extremely 'scam'able' environment and I have personally had experience of clients who have tried to do this via offshore companies, and not only lost the whole pension, but been landed with a huge tax bill for the privilege (double loss!).

Here's a link from the FCA website https://www.the-fca.org.uk/consumers/early-pension...

However....there are many many different types of investments you can hold in a pension these days - I've even got one client who has a biomass boiler in his pension which sits in his business burning the waste from his factory and the government are paying him for the privilege! You can have gold, commercial premises, almost anything except residential property.

I would say get more into your pension if you are able, especially if you are a higher rate tax payer. There's no investment in the world which will give you an immediate 40% return, and if you have plans to retire at age 55, then you only have 10 years to contribute. £200k is a fair amount, but certainly not enough to provide a decent level of income from age 55 until death (statistically).

[wildcat45]

Thanks for the advice.