How to get the cash out of your Pension

PaulS · Post by **PaulS** » 25 Jun 2005, 01:06

I have investigated the situation over the past six months and have 'rescued' my pension. I mean I now have access to the cash and can invest it as I wish, rather than relying on a stockbroker in a pension company (And you know the definition of a stockbroker - its the guy who looks after your money, until its all gone)

Pension schemes are very long term financial investment. These make sense in times of steady growth, not in times of extreme uncertainty AND the possibility of a stock market collapse!.

If you have a pension, you CAN get your money out and you CAN use it the way you want to. Everybody with a pension has the right to transfer the current value out of their existing pension scheme into a new pension scheme. And that include the money contributed by your employer, as well as your own contributions.

There are two special pension schemes, in which you are the guy deciding what to do with the money, which still has to be invested, rather than spent, but it could buy you a plot of land, piece of a wood (very cheap now, maybe very useful in the future), property (hmm, too expensive), bullion (as much or as little as you like), oil company shares, oil futures, buy a business, may be a workshop, etc, etc.

These pensions are known as SiPS (Self-invested Pension Scheme) and SSAPS (or SSAS) (Small Self Administered Pension Scheme).
SiPS is for individuals, SSAPS for companies.

SSAPS cost some ?1,200 to set up and some ?500 per year in charges (because by law you must have a 'pensioneer trustee' and produce annual accounts). SiPS are probably cheaper.

Once set up, you can transfer the 'transfer value' of your current pension scheme(s) into your own, except for so called 'protected rights', which is he money that the Government has paid in for you (SERPS for example).

This is exactly what I have done and I am about to invest most of the money in agricultural land.

How do you make it pay?

For say ?30,000 you can buy a field of about 10 acres, that is your SiPS buys it. Your SiPS then rents it to a grateful farmer (farmers are keen to do that, so no problem) who pays about ?100 per acre per year. That?s ?1000 income, less the charges and your pension has grown by ?500 in a year. Not much, but at least its not reducing on the stock market out of your control, and of course a) it will be worth a lot more in the PO future and b) you could get into small scale farming yourself now or later.

SSAPS are trusts, which can be shared between as many people as you like, each retaining their fenced in part of the total. So even small amounts can be pooled and made to work. To make sense, given the charges, you need at least ?20,000 in the Sips or SSAPS.

I am happy to answer any questions as far as I can, not being a professional in the field.

snow hope · Post by **snow hope** » 25 Jun 2005, 10:16

Thanks for a great summary Paul. From April 2006, SSAS (Small Self Administered Scheme)and SIPP (Self Invested Personal Pension) become the same think. I am looking at this route for my pension due to fears of stockmarket crashing.

One downside is that they can be a bit expensive because of the fixed set up and annual administration fees plus trading fees. Mind you compared to a crash in the markets, I definately prefer this route.

peaky · Post by **peaky** » 27 Jun 2005, 14:03

Thanks a lot Paul. I was looking at my pension the other day to see if there's a let out clause and I couldn't see one. I've stopped paying in but it seems like money burnt for the same reason as I'm not making contributions - I imagine the economy will be toast by the time I reach retirement age.

I want to get into an intentional community - do you think your scheme would help in such a situation?

PaulS · Post by **PaulS** » 27 Jun 2005, 15:40

I should think so. SSASs can have lot of members/ trustees. But a word of warning - every SSAS action requires the agreement of 100% of the trustees, so be careful whom you share it with.

andyh · Post by **andyh** » 27 Jun 2005, 19:06

Hi Paul, very interested in your comments. I took voluntary redundancy from my academic post last year and have 19 years worth of contributions with USS (University Superannuation). Like others I severley doubt I will be able to get my hands on this - I am 20 years away from conventional retirement age. Do you think I could do as you suggest and transfer the money to a SIPP? we are emigrating to NZ, so it would be fantastic if I could free up the cash to buy extra land there - any more details?
Thanks a lot

grinu · Post by **grinu** » 27 Jun 2005, 20:06

Don't know the first thing about pensions, but was reading this today.....

http://www.fool.co.uk/pensions/articles/further.htm

Apparently the government is chanbringing in new pension legislation in April 2006.

"4) Small pension pots

Currently, all pension pots of more than ?2,500 have to be used to purchase an annuity. However, from A-Day, you'll be able to take 1% of the Lifetime Allowance in cash. So, in 2006/07, you'll be able to take a pension pot of below ?15,000 in cash. In addition, up to 25% of this amount will be available tax free. The Association Of British Insurers reckons the average annuity purchase at the moment is not much more than ?20,000, so this proposal will affect a lot of people.

Impact: If you've got a small pension pot that you're about to convert, it might be worth hanging on until after A-Day."

PaulS · Post by **PaulS** » 04 Jul 2005, 00:48

andyh wrote:Hi Paul, very interested in your comments. I took voluntary redundancy from my academic post last year and have 19 years worth of contributions with USS (University Superannuation). Like others I severley doubt I will be able to get my hands on this - I am 20 years away from conventional retirement age. Do you think I could do as you suggest and transfer the money to a SIPP? we are emigrating to NZ, so it would be fantastic if I could free up the cash to buy extra land there - any more details?

In principal, I think you can, but ...
1. Just google SIPS pensioneer trustees, chose a few (5+) get them to quote to set it up and annual charges. I managed to get about 50% discount on the running costs by stating that there would just be one principle investment and then perhaps 1-2 minor investments per year (just the SIPS's income from the investment).
2. Investments abroad: not something I went into, you need advice
3. Pensioneer trustee has to counter-sign all deals, which may be a little slow from NZ
4. Perhaps you may be able to transfer your current pension value directly to a scheme run under the NZ laws - might be a lot simpler.

I use N M Perris in Bristol (the nearest to Cornwall- obviously nobody in Cornwall believes in pensions!), no vested interest, and they are fantastically helpful.

BTW, good choice, NZ. Good luck!

nancy · Post by **nancy** » 05 Jul 2005, 03:40

Paul S,

Thanks for taking the time to post this stuff, highly relevant to many of us in the uncertain times ahead. I already live down under, but have a UK pension still. I investigated with the aid of very expensive advisors a) bringing it into OZ , but it would be taxed very heavily (not sure if this is the same in NZ), and b) converting it from a defined benefit scheme with Prudential to a SIPP. This was back in 2001, before I knew about PO. I too theoretically have 15 years until the pension kicks in, although I could elect to start taking it in a couple of years.

At the time the projected final pension was was better than the advisor reckoned could be got by taking the transfer value and taking out a SIPP (it assumed an average 7% return pa).

I had been thinking of taking the take the money at 50 option, even though it would not be quite enough to live on, I figured a bird in the hand and all that...........

Would you recommend revisiting my decisions?

andyh · Post by **andyh** » 05 Jul 2005, 07:52

Hi Paul/Nancy

Firstly thanks Paul for your reply. Its a fascinating topic and one that i think many folk will become interested in. I checked what my pension provider is invested in - something like 65% equities, rest in bonds etc. Clearly if things do pan out as we think they will those sort of investments will take a real hammering.

I can indeed transfer what I have in my pension into a SIP type vehicle (and if I was to do this in the UK I would tend towards using it to buy agricultural land). However I am now investigating transferring it to NZ - it can be done and I would be much happier being able to then use it to buy land there. I have not found out as yet whether SIP type vehicles exist in NZ - I am not simply going to transfer it to a NZ based fund managed scheme if thats all thats on offer. I have found advisors who do this sort of work: http://www.ukpension.co.nz/
(for a fee), and interestingly it seems that in NZ once you are there a proportion of the capital can be accessed directly.

Anyway will let you know how I get on - if I cant get it to NZ into some sort of land based investment then the option that Paul has taken (into a SIP in the UK invested in land) seems to me the next best option, although I would then be in effect an absentee landlord.

Post by **mikepepler** » 06 Dec 2005, 07:58

Update: there's been a change in SIPPs:

The chancellor has decided that Self Invested Personal Pensions (Sipp) will not be given immediate tax relief for investments in residential property.

Story on BBC

Totally_Baffled · Post by **Totally_Baffled** » 06 Dec 2005, 10:42

Guys.

Help me out.

I have been paying into a company scheme for roughly 10 years at ?100-?160 a month.

Is there anyway I can get the cash out?

I would rather clear the mortgage than watch this cash go down the toilet....

I think I might be locked in ....

Post by **mikepepler** » 06 Dec 2005, 13:52

Totally_Baffled wrote:Guys.

Help me out.

I have been paying into a company scheme for roughly 10 years at ?100-?160 a month.

Is there anyway I can get the cash out?

I would rather clear the mortgage than watch this cash go down the toilet....

I think I might be locked in ....

I asked my pension advisor at my old company, and my dad (a tax inspector), and they both said I can't get at it until I reach retirement age - whatever that may be when I get there! Also, at the moment it has to be spent mostly (or all?) on an annuity, but I think in future you'll be allowed to do other things with it. I'm not really bothered though - I have 30 years to wait, and by then it'll all be buggered. I've just written it off and moved on

Pippa · Post by **Pippa** » 20 Sep 2006, 17:17

Paul

Who now manages your SIP?

Post by **kenneal - lagger** » 21 Sep 2006, 02:40

Don't rely on ?100 per acre rental. It will vary over the country. I pay ?25/ acre this year, down from ?40 last year, for 10 acres near Newbury and I hope to get that down again next year.

A friend of mine uses several large fields for nowt. The farmer just wants them grazed to manage them as he can't find anyone to rent them.

I agree with the general idea though. When looking for land make sure its close to where you live because you don't want to have to DRIVE YOUR CAR there. If you're going to use it for growing food you will have to think about security. A wood is a good idea as it will provide you with fuel. Look for SSSI coppice woodland as English Nature may be paying for it to be managed as coppice. They pay you for you to cut your own firewood and you can sell some as well! Don't worry if the land is very wet, you can always grow willow coppice, and with the climate drying because of global warming, it will be the last land to remain productive. It will also be relatively cheap to buy now.

I'm off now to see about my own SIPP, there's a nice block of SSSI coppice next door. Who needs cash anyway?

Pippa · Post by **Pippa** » 21 Sep 2006, 15:31

Todays quest has been to try to liberate our pensions, a big move on from yesterdays which was to kiss them goodbye.

Have been doing my best to follow PaulS advice, so far not so good.

We have got two plans, one for ?30,000 and the other for ?7,000, which we would like to save. Have done as suggested and contacted various firms whose charges vary wildly. My experience to date is that you can't get anyone to take it on individually without incurring costs well in excess of ?1,000 a year. It was also pointed out to me that the costs of buying land (solicitors and transfer costs etc) were about ?4,000.
Then as pointed out by kenneal you need to rent it out or stump up annual admin charges of ?450 plus vat (which rise every year with inflation

). Gold seems to be a tricky subject - which I haven't got to the bottom of yet!?*

The best product I have found so far is at www.sippdeal.co.uk there is an initial set up fee of ?100 then ?50 transfer fee. There are no annual admin charges and you pay only for deals as you go - cost up to a maximum of ?30.

I think this sounds very promising and is good for even very small paid up plans. Any other comments appreciated.

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How to get the cash out of your Pension

How to get the cash out of your Pension

fascinating

Re: fascinating

Farm rental income