Stakeholder pension

[crapmemory]

I was made redundant last November and still have not managed to find a job. I contacted the company that I paid into for a stakeholder pension when I was employed to see if I could have the money as a lump sum (about £14000).
They have told me I can expect about £3600 tax free and I will have to pay tax on the rest and then try to claim it back. Is this correct? TIA

[bednobs]

i didn't think you could get money out of pensions until you retire?

[tastymorsel]

You can get your stakeholder pension at any time but you lose quite a lot of it in "penalties" I claimed mine at 60 and was allowed a third in a lump sum and the rest is used to give me a monthly pension.If I had left it I would have been able to collect a larger sum when I eventually gave up work because obviously I would have been adding to it via my salary.It's a personal choice really.

[crapmemory]

I had a phone call from them a little while ago. I was told today that I can't touch any of it until I am 60 (55 at the moment) even though yesterday they said I was eligible!!! Totally stumped now!

[DocHH]

I must admit that I thought that following private pension reforms a few years ago it was possible to take the benefits at 50. Normally 25% lump sum, and buying an annuity with the remaining amount. However the rules for Company Administered pensions may differ to those administered by Insurance Companies.

[annie0000]

Pension legislation now means that you cannot take the proceeds of your pension until you are over 55 - there can be a few exceptions to this depending on the conditions of the scheme but they are few and far between. You are entitled to 25% of the proceeds as a tax free lump sum. the rest is designed to provide you with an income in retirement. If certain criteria are met, relating to your age and the amount of your total pension funds etc, then in some circumstances, you can take the whole lot as a lump sum if you are over 60 but you will pay tax on 3/4 but you may be able to claim that back in some circumstances.

You get tax relief added to your contributions to a Pension scheme and they are there to provide an income in retirement. they are not a savings plan otherwise they would be the best savings plan available given that you will get between 20 and 40% added to your your contributions by the taxman.

That's why it is not easy just to ask for your money back and get it tax free.

You could retire now, claim your 25% and buy an annuity with the rest to give you an income, but being honest here, it will not give you a lot.

[Hymie]

At age 55 you should be able to take 25% of any stake holder pension pot as a tax-free lump sum i.e. £3,500. The remainder must be used to buy a pension annuity. Currently a pension pot of £10,500 will buy a 55 year old male, a fixed pension annuity of around £525 per year (£10 a week, fixed for life [taxable]).

There is one fly in the ointment – and that is whether the pension was contracted out, or contracted in (the State scheme). If it was contracted out – then the pension must buy you an annuity at least the level which would have been achieved, had you been contracted in the State scheme. Things are further complicated by the fact that the value of the State scheme is assumed to increase each year with a notional inflation figure. If your pension was contacted out of the State scheme, and the contracted in State scheme is forecast to payout more than £10/week at age 65, then your pension scheme cannot payout the money now.

However if your pension scheme was contracted in the State scheme, I can see no reason for you not getting your hands on £3,500 now, and £10/week for the rest of your life.

[factor-fiction]

Apension scheme is a scheme to make contributions which are boosted by a form of tax relief and will provide a regular pension with a concession that 25% can be taken as a 25% tax free lump sum. It's not a savings scheme where you can just withdraw all your money in one go