Has anyone cashed in their pension before 55? Is it even possible?

[TinaAnglewood]

Is it possible and has anyone cashed in their pension before they were 55? If so we’re the financial penalties massive, like 50% or something daft?

I’m 52 and considering cashing in my meagre pension. I’ve worked minimum wage jobs my whole life with several years off as a lone parent of 2, so it’s barely anything at all. In fact sod it I don’t care if you know ; it’s about £15k

I can take it without financial penalties when I’m 55, but I’d like it earlier. I don’t know if that’s possible yet I haven’t asked them.

Health reasons, who knows how long I’ll live, incoming wrecking ball recession, ....I’d like to invest in something tangible and a guarantee non-depreciation investment. Life is short. I don’t want to transfer it to a better pension or anything financial, I just want to take it out and buy this tangible item with it, which is an investment in itself.

Were not we’re obv.

Usually you'd only be able to do this if you had a life-limiting medical condition.

What makes you think that you'd get a better return on investment from something other than your pension?

@Palavah because the research has been done to ensure that’s the case. My pension isn’t going to increase —very much at all— in the next 3 years whereas this thing is will never depreciate.

i did based on my disability. cashed out when i was 43.

If you are taking a massive financial penalty to take your pension out early, this thing you are going to invest in must do much more than not depreciate. It must go through the roof in 3 years or you must get some form of enjoyment out of it that is non-financial e.g. a piece of art or jewellery.

3 years is not a very long time at all.

I took mine out at aged 50 as the law was changing that particular year, if I hadn't I would have had to wait until I was 55. Looking back, I would have been much better off waiting.

However, I needed the money at the time. Cashing in early is only useful if you need cash and have no other way of getting it, you take a big financial hit. There is no way you will find a 'better' way to invest it, however good it looks on paper. But for sheer cash need, it can be a lifeline.

What types of pensions are they OP? Self invested, occupational, defined benefit?

I think it's 'tax-free' if you take 25%. If you take the full cash payment the remaining 75% is taxed at your normal rate.

I used to work in pensions. As a PP says, the minimum age at which you can access your pension under current Govt rules is 55, unless you have a life-limiting medical condition; you would have to provide medical evidence from a hospital/doctor to prove this.

There are companies out there who will say they can access it for you, which are dodgy, even if they say otherwise - there will be a hefty cut in it for them, and if HMRC come after you you (which is very likely) you could end up with a significant tax liability on top, you could end up with less than half of the amount in your pension pot.

It's really, really not worth it OP.

Apart from the fact it would be a really bad idea financially it’s not possible
There are tax advantages in saving into a pension so if people were allowed to take money out before 55 loads of people would use the tax breaks and then just take their money out when they wanted. So it being locked up is the price you pay for the tax breaks
It used to be possible to get the money back if you had only paid into a company pension for a couple of months before leaving for example but that’s been stopped now too.

And yes, definitely avoid any company who claim to be able to do this for you

Yes if you take it at 55 only 25 percent is tax free. The rest counts as income and you will have to pay tax on it at source and then try to.clsim some of it back from tax people. That depends on how much you earn or benefits in that 12 months tax period. You get £12500 tax free allowance so after that you pay tax at 20 percent. You would need to check out if you had pension but free it out and spent it if/how that might affect any pension credit claim later otherwise nothing to stop everyone drawing pension out then drawing pension credit.

I have 2 pensions Teachers Pension and a separate Stakeholder. I withdrew £10k at 56 from my Stakeholder but I pay in £600 per month plus get government top up and it has now caught back up to where it was before withdrawal. As it is s second pension 80 percent of it is invested in quite risky markets though.

Will you be able to make any of it back by time you retire?

Another thing to consider is I have read Sunak is considering moving age you can withdraw pensions without penalty to 57. Apparently too many people have been withdrawing them and spending but then when retire can't manage on money they get.

@Hoppinggreen

And yes, definitely avoid any company who claim to be able to do this for you

This! I work for a DB scheme and when sending scam info to members one of the first things we warn of is companies offering pension release pre 55.

There is an advert on the tv of a guy on a jet ski living it up after scamming people.

@caringcarer

Another thing to consider is I have read Sunak is considering moving age you can withdraw pensions without penalty to 57. Apparently too many people have been withdrawing them and spending but then when retire can't manage on money they get.

I thought it had already happened and it was 58. Gutted 😬😭😭