Cash in Pension to reduce Mortgage?

M

Mel

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I'm disgusted with the recent raid on pension funds, I didn't think any government would stoop so low. I've paid diligently into a pension fund for the past 8 years, as advised and encouraged by the government, even though I could ill afford it.
I only have a small pot, say circa. 20K at present value.
I'm considering cashing this in and paying it off against my mortgage -
value of house, estimate 160K max, balance on mortgage I think around 200K, tracker rate of 2.5% with a favourable contract that allows me to make additional payments, lump sum payments with the option to withdraw them at a later date.
I'd like to hear opinions on the pros/cons of cashing in current pension, paying this into mortgage to reduce the balance/monthly repayments, and perhaps saving or investing in a different way rather than continue with the pension, or alternatively continuing the pension as it's a work scheme with employer matching contributions.
I'm a single parent with no other supports at present.
 
Oh. I did this in a previous job - when I left I had an option to leave the contributions where they were or cash them in - at the time I cashed them in.
What are the circumstances?
 
Mel said:
Oh. I did this in a previous job - when I left I had an option to leave the contributions where they were or cash them in - at the time I cashed them in.
What are the circumstances?
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I think it is if you are in the job less than 2 years(??) or at a certain age and the scheme allows you to.
 
Thanks Sunny.
I'm feeling more like a sitting target with every passing week... :rolleyes:
 
That's strange Sunny. I recently had my pension released. I think it's just knowing the right people that can do it for you.
 
koscienly said:
That's strange Sunny. I recently had my pension released. I think it's just knowing the right people that can do it for you.
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Hi Koscienly,

Was it worth your while by the time you paid the tax on pension when you drew it down?

angela59
 
Up until a few years ago I believe you could cash in a pension as long as you were less than two years in the scheme. You would pay tax on this obviously and you couldn't take any employer contibution with you. Currently, if your employer matches your contribution of say 5% it means that you are getting 10% into a pension fund and if you are in the top tax bracket this would mean for 2% of your net income you are getting 10% into a pension fund. The annual fee the government charge will cost you is not much compared to what your fund is (although I'm not defending the charge). So perhaps you should think about it like a small bonus for now. Of course they will reduce the tax breaks for this in time and you will pay more but for the 20k in your pension it has only cost you 4k over the last 8 years assuming there was no real gain in that time.
 
koscienly said:
That's strange Sunny. I recently had my pension released. I think it's just knowing the right people that can do it for you.
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Are you referring to the practice of transferring a fund overseas to a country where the regime is more relaxed like New Zealand by any chance? The guy in the middle takes a big commission for facilitating this.

Do you know what the tax implications are in the various jurisdictions through which your pension fund must pass? Including when you bring the money back into Ireland?

Have a read of [broken link removed] also, or just Google "Trust Busting QROPS".
 
Hi Dave,

Thank you for the article. I found it interesting and informative.

The scheme you referred to seems to be similar to the one I used. I felt the charges were reasonable and not too high.

My position simply was I needed to access a pension I had paid into for a long time to help try save my business . I'd stopped paying in to the pension a few years back and every year I got my statement my fund seemed to be depleting.

I feel lucky to have been introduced to a guy that was able to get my pension fund back, despite the pension company telling me this could never be done.

After I read your article I read more on your website. I have to say I found it very professional. Congratulations on it, I may need to use your service sometime in the future and I certainly know my best man who is from London will be interested to read about your services. Thanks for your help and advise.
 
kos

Are you based in Ireland? I don't think that this works for Irish pension holders. It has been discussed on askaboutmoney before.

Brendan
 
For the record, that's not my website, nor have I any connection with that business. I just posted the article for information.

kos - How did you deal with the taxation issues in Ireland and overseas?

What percentage of the fund did your guy charge?
 
Dave,

Sorry I thought that was your website, apologies, nonetheless I found it very interesting. Probably not a great idea to be discussing taxation issues on the web or charges, but it was a resonably small percentage charge for the service. Do you provide a similar service?

Ben,

Yes, I'm based in Ireland and yes, this can be performed for Irish pension holders despite what you may have heard. I had heard that too, infact I had contacted my pension company numerous times and was told same. A few months back I was worried about next week not when I reached 65. I hope that helps you.
 
koscienly said:
Probably not a great idea to be discussing taxation issues on the web or charges, but it was a resonably small percentage charge for the service.
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Why not? If it's above board, then it would serve to educate other users on how these arrangements work. That's what Askaboutmoney is all about - sharing information.

What was the percentage charge?

koscienly said:
Do you provide a similar service?
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No.
 
Dave,

Do you not believe the service exits in Ireland?

What advise would you give a man who is broke, behind on his mortgage, had no joy whatsoever with the banks and is about to lose him home. Then suddenly he realises he had a chance to reclaim his pension.
 
I'm just curious to hear from someone like yourself who has actually released an Irish pension fund before retirement, to understand what the tax implications are, including when you bring this money back into Ireland and also what the charges for doing it are.
 
koscienly said:
Dave,

Do you not believe the service exits in Ireland?

What advise would you give a man who is broke, behind on his mortgage, had no joy whatsoever with the banks and is about to lose him home. Then suddenly he realises he had a chance to reclaim his pension.
Click to expand...

Are you involved with these service providers? You sent me a PM offering me the name of the person who did for you if I rang you. I am more interested as Dave says, in finding out the tax implications of what you did. Not sure why you won't share it on this forum.
 
Apologies to Sunny, I'm new to this and I thought I was replying to a PM and no is the answer to your question, certainly not.

Taxation issues are something I know little about. I believe they're are many taxation experts on these matters that can offer you advise.

What would you do in my situation Dave? Stay broke? or release the pension, pay the charges and the tax, and have enough to pay your bills again and feed your family.
 
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