Question:

Can I cash in my private company pension? UK?

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I have heard a rumour that in the UK if you leave your job after 2 years or less you can cash in a company pension plan. Is this true or can you only cash in the portion you contributed to (if any)?

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  1. you can cash it in, but remember it means you'll be poorer when you retire.


  2. If it's a Final Salary (aka 'defined benefit') Scheme, you will get back your own contributions (after Tax)

    Otherwise, for a Money Purchase (aka 'defined contribution') Scheme, you will get back the current value of your investment, after Tax (the stock market has dropped over the last 2 years so you can expect to loose 20% or so)

    From The Pensions Advisory Service :-

    If you have left service then only if you have completed less than 2 years' service can the employer refund your own contributions to you. A refund of contribution is subject to tax, 20% to the first £10,800 and 40% for the amounts in excess of £10,800. If you were contracted-out, a deduction will also have to be made to buy you back into the State Second Pension. Please note that the employer contributions are not returned to you. If the scheme is on a money purchase basis - that is, a 'pot of money' grows subject to investment performance - rather than a final salary scheme, then any refund will be based on the value of your contributions. This may be higher or lower than the actual contributions made. If you have completed more than 2 years' service a refund of contributions is not available to you.

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