Wrong Type Of Pension!

[djtdjt]

I have an old pension from 1986-2002 so when the government said you can cash them in when age 55 I thought that's good! However, the pension company says that it's an "occupational final salary scheme" and currently does not allow flexible drawdown of your benefits. So are the government lying? or is the pension company lying? Anyone had a similar situation? TIA.

[bednobs]

neither are lying. You cannot cash it in.

[fiction-factory]

You must have misunderstood the provisions of the pension freedoms. The chancellor made it clear from the start that they only applied to defined contribution schemes and not to defined benefit schemes. If yours was final salary which it probably was then it's too good to cash in anyway I expect. You can take 25% as a tax free lump sum though

[djtdjt]

Hi bednobs, It's my money, it's not doing anything, the government says okay to cash in, does not seem fair to me!

[ubasses]

Nobody is lying, however if your scheme permits, and they do not have to, you could transfer from your DBS to a DCS. This is not usually a good idea as you would lose your guaranteed income and transfer fees could cause it not to be cost effective.

Another possible option is if all your pension funds total less than than £30,000 you can draw all the pension in cash. If you have other pensions that bring your total to over £30,000 but the one in question is no more than £10,000 then you should be able to draw the full cash amount.
However you may have to wait until 60 to take the £10,000.

[fiction-factory]

The main idea was to stop people with defined contribution schemes being forced to buy an annuity. I think there may be a provision to transfer your fund to another provider- at a cost- and you may then be able to get at it, but you'd need to pay for financial advice and you would probably be advised not to do it unless circumstances were exceptional- eg you had 6 months to live or had crippling debt to pay off

[djtdjt]

Hi fiction, Yes i'm afraid i'm very yes/no, if government says okay to cash in then I think why not, that's why i'm very irritated by type of pension.

[ubasses]

In answer to your reply to Bednobs, it isn't actually all you money, your Company was making contributions during your employment and the tax man contributed 20%. On top of that your employers have had to increase your pension annually since the date you left it by the amount of inflation. This is why they put in quite tough rules.

[fiction-factory]

Also, I would think that if they'd allowed people to cash in occupational final salary schemes the withdrawals could well have led to many schemes collapsing as they operate on the basis that there will be a steady stream of contributions in and of payments out which will be spread over maybe 20 years on average - not cashed in overnight

[Old_Geezer]

It is your money but you got tax advantages by agreeing it would provide your pension. Which means it's not supposed to be withdrawable. If you paid back all the advantages you got because of this you might change your mind about wanting what's left as a lump sum.

I think pensions are not clear to most and do not agree it was clear that this cashing in applied only to some. Every mention of it seemed to assume it applied to all. But in compensation DB pensions is what folk need and you have one. Be thankful. DC pensions are a risk to the individual and obviously cheaper for the employer.

[New Judge]

"Hi fiction, Yes i'm afraid i'm very yes/no, if government says okay to cash in then I think why not,..."

But the government did not say that. As has been pointed out, they said it was OK to cash in pensions held in defined contribution schemes. Yours is not a defined contribution scheme it is a defined benefit scheme. So your "yes/no" comes out as a "no".

It's like being told it is OK to eat apples and you moaning that you cannot eat oranges. Both are fruits but apples are not oranges.

[ToraToraTora]

cashing in applies to the more common "money purchase" scheme, final salary schemes are structured differently. In fact they are a usually a lot better than MP schemes but the amount you get is not based on a pot size rather a set of rules based on final salary, time in scheme etc. They are not included in the government's changes.

[Peter Pedant]

yeah FF is right

there are crap pensions ( which you dont have )
and final salary pensions ( one of which you do have )

and for some reason who are whining about it
thousands wouldnt but would like back and enjoy it
( OK you will have to wait but that is but a slight draw-back )

the pension you have dont exist any more because they were such a good deal ....

[auntie-bertie]

I would actually call it the "right type of pension" ....