# Selling a pension, can it be done?



## Gary-360 (Apr 26, 2008)

I have a personal pension which I haven't paid into for a number of years. It's not a great sum (about 20k) and will only give me about 1k/yr pension.
I could put the money to better use now as I have made other provisions for my future (company pension/savings/property etc.).
Reading a few sites, I keep seeing reference to being 50+ before being able to sell/cash in a pension, is this correct (I'm 40)?

Any advice would be appreciated.

Gary


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## BestGear (Mar 25, 2008)

Hi

I am affraid you cannot do much with it until you are older.

If you go to Martin Lewis's (MSE) excellent site, you can read more....

I wanted to do the same, thinking the money would be better paying of thge mortgage... alas, you cannot touch it....

David


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## CupraRcleanR (Sep 2, 2007)

No, can't cash it in or sell it on. Laws of Triviality (sp) is below £15,000 (where you can cash in) so you are left with the following:


1. Leave it where it is and take it out when you retire. although it will be a poor return.

2. You could start it back up again and re-start contributions.

3. You could transfer it to a new pension you may have maybe with your new employer. They may not except it tho.

Hope this helps.

Maybe others can help further.


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## Gary-360 (Apr 26, 2008)

I've just come across that site, definately 50+ and rising to 55 in 2010. This is bloody criminal, it's my money for gods sake!

Don't get me wrong, I don't "need" the money, it's just a wasted investment for me and the money could as you say, go towards my mortgage.

Gary


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## Gary-360 (Apr 26, 2008)

CupraRcleanR said:


> No, can't cash it in or sell it on. Laws of Triviality (sp) is below £15,000 (where you can cash in) so you are left with the following:
> 
> 1. Leave it where it is and take it out when you retire. although it will be a poor return.
> 
> ...


That's an easy one, as I am a Director of the company 

When we started the company scheme, I asked about transferring my private pension and was advised to leave it as is, it could be used as capital for a commercial acquisition policy or something?


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## CupraRcleanR (Sep 2, 2007)

See your point but the Gov don't want people cashing in pensions, blowing the money and then relying on the State in old age.


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## CupraRcleanR (Sep 2, 2007)

Gary-360 said:


> That's an easy one, as I am a Director of the company
> 
> When we started the company scheme, I asked about transferring my private pension and was advised to leave it as is, it could be used as capital for a commercial acquisition policy or something?


Yep, Self Invested Pensions (SIPS) I believe there called. Could be usefull to you in your position. Above my station tho sorry mate. Needs specialist help.

all the best.


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## Gary-360 (Apr 26, 2008)

Thanks for the info, and I understand the gov's reasoning, as if overpaying tax doesn't cover my back 

Gary


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## Jakedoodles (Jan 16, 2006)

That's just reminded me. I paid into an NHS pension for 7 years. It was about £80pm, so paid in about 6.5k. Can I do anything with that? Sorry to hijack.


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## Gary-360 (Apr 26, 2008)

Well, I had an MOD pension and transferred it to a private pension (Bond 32) through the Pru, so it can be moved.
I actually claimed damages from the Pru as it was bad information at the time.


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## Jakedoodles (Jan 16, 2006)

Gary-360 said:


> Well, I had an MOD pension and transferred it to a private pension (Bond 32) through the Pru, so it can be moved.
> I actually claimed damages from the Pru as it was bad information at the time.


I don't have a pension though, and won't ever have one. Have investment elsewhere see!


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## CupraRcleanR (Sep 2, 2007)

there are certain rules brought in with "A" day a year or so ago. Its worth dropping a line to the NHS Super Annuation scheme to see what your options are, such as transferring it to your own Stakeholder Pension or possibly cash it in as it is a small amount and below the £15,000 magic figure. If you're of retirment age.

It depends on other pensions you may have. If they all total less than £15,000 the cash in option applys. Not 100% tho so hopefully others can "flesh" this out abit.

Hope this helps


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## CupraRcleanR (Sep 2, 2007)

Triviality after A-Day. As you'll know, people whose pension savings are regarded as being trivial can decide to just throw the towel in and give up on the idea of a pension and just get their cash back instead. This has always been possible with our pensions in the UK, but after A-Day the definition of what counts as being trivial is being revised. Basically people with pension funds of less than 1% of the Lifetime Allowance (the maximum tax efficient pension pot we will be allowed to put together) will be able to go for Trivial Commutation. In the 2006/7 Tax Year the Lifetime Allowance will be £1.5 Million, so people of *retirement age* who have pension pots which total £15,000 or less will be able to call it a day and cash them in.

The triviality limit will apply to all of a person's pension holdings, so there's no possibility of people accruing loads of pensions all individually under £15,000 and cashing them all in. It's only designed for people who really do not have pension savings that could produce meaningful benefits. A sort of 'get out of jail free card' for people whose long-term savings plans really didn't pan out the way they'd have liked.


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## Gary-360 (Apr 26, 2008)

OK, who wants a 20k pension for 10k? drop me a PM and when I'm 65, you'll get a grand a year for the rest of my life


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## Jakedoodles (Jan 16, 2006)

I'm only 26. Does that rule me out of cashing it in then?


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## CupraRcleanR (Sep 2, 2007)

Wonderdetail said:


> I'm only 26. Does that rule me out of cashing it in then?


Pretty much.


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## shani (Dec 14, 2008)

Gary-360, 

Generally speaking you won't be able to "surrender" your pot. Pension savings are tax efficient (i.e. contributions are often deducted from salary before tax). However the investment returns for pension savings are also tax efficient. Now if you could just take this money then people could just use their pension pots as tax-dodging investment vehicles.

However you will probably have the right to transfer your pension pot to another "appropriate" arrangement. This is effectively known as taking a transfer value. Where, when and if to transfer your pension pot is a matter up to you and you should consult an IFA about this. 

If you work for an employer who provides an occupational pension you may be able to transfer you personal pension into this arrangement if the occupational scheme is prepared to accept a transfer in.

However come retirement under the current regime (i.e. "Post A day") you have the right to take up to 25% of your "pension pot" as a tax free lump sum. Now if your other pension arrangements are all defined contribution in nature i.e you are just building up a pension pot and will then secure them as annuities at retirement, then the way you calculate your max tax free cash is easy. Just add them all together and 25% of the total is your max tax free cash allowance subject to Her Majesty's Revenue and Customs limits. The max allowed pot is £1.65m for tax year 2008/2009 meaning you could take up to £412,500 as max tax free cash if you retrired this tax year. 

If however you have any defined benefit pensions i.e. you have an accrued pension such as in a final salary arrangement then the calculation is slightly more complex and you may be able to request a max tax free cash projection from the Trustees of the arrangement.

In summary you can really only start withdrawing this money at retirement at which point you could potentially use this personal pension pot for tax free cash. However taking a cash lump sum instead of taking a full pension is not for everyone and you should consult an IFA. It's never too early to start thinking about your retirement.


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## Jim (Jan 19, 2008)

Not sure if this point has already been made, but there are often fairly substantial penalties for early surrender/transfer of PP policies. It does depend upon the insurer/product though. You should be able to obtain a quote of the current fund value vs. the surrender/transfer value directly from the insurer without too much trouble.

Also, the ongoing administration fees that some of these contracts support (particularly the older ones) can quickly deplete smaller funds - something else to ask for info on. Not likely to be much of a problem at your level of investment, though.


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## 1animal1 (Aug 20, 2008)

best bet is going to an IFA...not a bank adviser that is limiited in products and knowledge...an actual independent financial adviser....they will take their fee in the form of commission from the recommended provider and recommend the best product for you based on your risk profile/needs/requirements/aspirations

I am a fully qualified FA myself and now work as a corporate adviser to IFA's - people really shouldnt make the decision to take money from a super annuation scheme without taking advice....an adviser will do what is called a transfer value analysis whicch gives an indication of benefits.... in lots of circumstances moving away from company schemes can result in loss of tax free cash (pre A day you could have more than 25% depending on your scheme etc)

Jim, partially right, lots of PP's out there, quite a few are clean contracts (exit penalties arent that common unless your in the early years but then its still few and far between)with nice low charges eg 0.55% - 1% annual management charge etc, although a good contract needs good funds and you get what you pay for - an insurers internal funds will be cheaper than external funds but the externals are more than likely to have better managers running them witrh proven records - he who pays

could really go on all day about these things...you should really get advice though sooner rather than later

hope this helps

Tim


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