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who's knows about pensions......please help!!!

anthwanthw Posts: 115
edited November 2007 in The Crudcatcher
BLOODY PENSIONS!!!

i have a pension with my current employer which i've had for around the past 3 years now i think. As it stands i'm leaving for a new job in a few weeks and was wondering what would happen to my pension when i finally left?
someone told me that if my contrabutions into my pension (company puts 5% in towards whatever i put in) were £2000 or under i could withdraw them and just get the cash back to do whatever i wanted with it.
When i questioned this with another person i was looked at as if i was an alien lifeform of some sort? Is the person who told me about it having a laugh at my expense or is it true? he swears it's true!!! I hope it is, cos i could do with the cash at the minute!!! :D

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  • fumpsfumps Posts: 227
    You need to find out who or which company is dealing with the Pension products.

    Give them a call & ask lol
    It has to be a regestered company with a licence to deal with financial investments.
    Arrrghhh it's worse than i thought!!!!!
  • anthwanthw Posts: 115
    how do you mean? The pension is through my company.....do i not just ask them? the company pension is with standard life.
  • anthw wrote:
    BLOODY PENSIONS!!!

    i have a pension with my current employer which i've had for around the past 3 years now i think. As it stands i'm leaving for a new job in a few weeks and was wondering what would happen to my pension when i finally left?
    someone told me that if my contrabutions into my pension (company puts 5% in towards whatever i put in) were £2000 or under i could withdraw them and just get the cash back to do whatever i wanted with it.
    When i questioned this with another person i was looked at as if i was an alien lifeform of some sort? Is the person who told me about it having a laugh at my expense or is it true? he swears it's true!!! I hope it is, cos i could do with the cash at the minute!!! :D

    No, you can't withdraw the money from the pension scheme. That would be an unauthorised payment under HMRC guidelines..

    The only way you could do this is if you had less than 2 years 'qualifiable service' and had made contributions yourself. You could then take a 'Short Service Refund' which would just be a return of your contributions.

    However, if the company has been funding it you're not entitled to any of it back as cash.

    What will probably happen is that it will sit in the company pension scheme until you tell them what to do with it. If you are opening another pension scheme, either a personal one or a one with a new employer, you would be able to transfer your existing one into it. Whether or not that would be the best thing for you to do would depend on the charging structure of the pension.
  • That's right - if you've been paying into a company scheme your contributions are taken out of your pay before tax is calculated so you have not paid tax on those contributions. If you were to get it all back as cash then you will then effectively have had some of your pay tax free and HMRC frown on that, funnily enough!
    There's always one more idiot than you bargained for.
  • Trailtrash, it's not that straightforward (nothing in pensions ever is) as you would be taxed on any refund you received, albeit at only 20% on the first £10,800 of the refund (40% on any excess), which is likely to cover most people's first 2 years contributions.

    Anthw, there's a good chance your scheme is a Group Personal Pension which aren't covered by the refund rules anyway - once in, the money's locked in even if you stop paying in within 2 years. As kitsuneandy says, whether it's worth moving the money depends on charging structures. As your's is a fairly recent contract, it will probably hae a fairly standard level of charges so the main benefit of moving the money to a new employers scheme would be to keep all your pension savings in one place, rather than any big financial benefit. The provider of your new scheme should be able to help you move your money if that's what you want to do.
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