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unclebulgaria67

Early pension withdrawal

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Apparently nearly 205,000 have taken up the opportunity to cash in their pension pots, following the rule change.

 

Is this a good thing, if they are not investing it, potentially having to need more state retirement benefits, if they have frittered it away ?

 

I am in favour of people having choice what to do with their own money, but i just wonder whether it will lead to problems in the future.


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I think this needs to be on the main pension forum - moved.


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This was something that concerned me (not that it is any of my business how people spend their own money) when it was announced.

 

Almost certainly there are some who would have paid any debts they have lurking around - perhaps even mortgage shortfalls due to endowments not performing correctly or because there was no other repayment vehicle in place.

 

There will be some who do try to find someway of securing a decent income for their retirement. However, until interest rates are increased they are not going to get a decent return on any savings.

 

However, there are going to be some who do just, as you say, fritter it away, but isn't that what the Chancellor wanted ? Money being pumped into the economy.


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To be honest, i would admire those who do use some of the money to pay for a world cruise or on something which may be a life long dream. Better to do these things when they are younger and fitter, rather than never get around to doing it.

 

Also those who use the money to secure their lifes in paying off mortgages and debts may be doing something pretty sensible. With some pensions, if you died before the money is released, it is lost. Not many people realise that in the event of death, the pension pot not accessed, is not always released to the estate. This is something people should inquire about. If you had a situation where a pension holder died before the pension date, it might not provide for a surviving spouse or dependents, who may be left with a mortgage to still fund. Had the pension holder accessed the money to pay off the mortgage before death, then the deceaseds pension money is not lost and they don't have property with a mortgage outstanding. I think this situation is possible from my understanding. I know when my Dad passed, there was no payment of any pension into the estate. But it depends on the pension type. I know the Solicitor checked with the company pension administrators at the time, as is standard practice.


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Altogether we had 5 different occupational pension funds with the largest one being worth about £10,000. We cashed in two allowing us to buy a caravan as I cannot travel overseas due to health issues. Two pay us out quarterly at different months and the other we will cash in as it is only worth about £500. It does not effect the amount of state pension we get, but is taken into consideration.

IMHO if moving from one employer to another, it should be made easier to transfer your pension to the new company's pension scheme as over a lifetime of working, you can collect several pension schmes varying in amounts.

Previously when living in South Africa, you could easily transfer the lump sum to the new pension scheme. Secondly if there was any money left over of the pension payments, i.e you had paid in 50,000, but had only received 25,000 before you croaked, your estate would still get a percentage or the surviving spouse would get paid until the funds dried up.

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