# Cashing in a Pension



## rustbucket (20 Jan 2011)

Is it possible to cash in a regular pension? And if so what taxes or other charges are deductable.

My GF had a pension in her old job and had been paying into it for about 3 years. 

She moved her original pension to another job and continued to pay into it for another year.

She has since gone back to college. We would like to look at possibility of cashing it in as its not a huge amount but may help to pay off part of a car loan.

Pension is held in Mercer. She got  a letter some time back asking her what she wanted to do with it (transfer to other employment, leave where it is) but dont think an option to cash it was an option offered.

I know we would be better to leave it and keep contributing to it when we can but would really like to get car loan cleared. We are not currently paying into pension and have not done so for about 18 months

Any advice appreciated


----------



## PaddyBloggit (20 Jan 2011)

not possible ... tis locked in 'til she retires.


----------



## rustbucket (20 Jan 2011)

Thats what I thought. Thanks. Shame- could do with the cash now, im sure a few people in similar situations


----------



## Sunny (21 Jan 2011)

If she is in the pension scheme for less than two years, she should be able to cash it in. It's not a great idea though if you can avoid it.


----------



## gearoid (26 Jan 2011)

Sunny said:


> If she is in the pension scheme for less than two years, she should be able to cash it in. It's not a great idea though if you can avoid it.



It depends what you do with the cash. You can cash in any AVC contribution to the pension if it is not fully vested i.e. if you lost the employer contribution by leaving before two years or five years previous to the law change. This would be subject to 25% exit tax I believe, but for this year, for higher earners, you will still get the 41% allowance on pension contributions if you re-invest the money in your new pension. I'd be grateful if a pension expert checks this, but I am about to do this myself for a small amount, and hopefully reinvest this in my PRSA later...

Regds,
Gearoid.


----------



## LDFerguson (26 Jan 2011)

gearoid said:


> It depends what you do with the cash. You can cash in any AVC contribution to the pension if it is not fully vested i.e. if you lost the employer contribution by leaving before two years or five years previous to the law change. This would be subject to 25% exit tax I believe, but for this year, for higher earners, you will still get the 41% allowance on pension contributions if you re-invest the money in your new pension. I'd be grateful if a pension expert checks this, but I am about to do this myself for a small amount, and hopefully reinvest this in my PRSA later...
> 
> Regds,
> Gearoid.


 
Hi Gearoid, 

Yes this tax planning tip works and the rate of tax applicable to refunds of pension contributions is 20%.  If you have access to the few bob, your best bet is to gross up your refund to take account of the tax relief.  

For example: - 


€10,000 - value of refund
€8,000 - value of refund after 20% tax
€13,559 - Add €5,559 to your refund from your own pocket and invest in another pension
€5,559 - tax relief on new contribution at 41%
€8,000 - net cost of your new contribution
Voila - instead of €10,000 in your fund, you've now got €13,559.

Won't work for all - watch out particularly that you're not forfeiting an employer contribution by taking the refund option.  

Liam D. Ferguson


----------



## Conan (8 Feb 2011)

TSpied
As pointed out earlier this is an Irish site. I think it was reasonable to assume that the original poster was referring to an Irish pension, Whether you are based in the UK or Zimbabwe, your comment that "similar options are availabe for Irish Pensions" is not true. If you are backtracking now to say that you are really talking about Irish nationals who might have UK based pensions, that is an entirely different issue. 
You are true in saying that the web is a big place, particularly for the unwary.


----------



## Brendan Burgess (9 Feb 2011)

I have deleted posts from overseas which suggest, incorrectly, that this is possible in Ireland.


----------



## elgy (8 Aug 2011)

I am age 64, and have a pension from my last job. I also have a  personal pension due to mature when I reach age 65. Do I have to take up this pension-less 25% which I can access soon- or can I leave it just sit there.? My ins. agent wants me to invest in an AMF/AMRF, but I feel this is only to make commission for himself, and will cost me to take-up.?? My fund in the Personal Pension is only about 18K and any advice I can get seems biased. Any advice very welcome. Thanks.


----------

