Can you access pension at 50 always ?

[coolaboola12]

I know that if i have left my employer its possible to access the pension at 50 but what do people mean when they say that trustee permission is needed. In a contributory pension what reason would they have to deny such a request ? And does it actually happen that they deny it ?

 

[Dave Vanian]

In a Defined Contribution pension scheme where you have a fund built up that's ringfenced for you alone, the trustees would have no reason to deny you access at 50 or onwards. If the scheme is a Defined Benefit scheme, the trustees can sometimes refuse to allow you early retirement if the scheme isn't in good financial health.

 

[coolaboola12]

In a Defined Contribution pension scheme where you have a fund built up that's ringfenced for you alone, the trustees would have no reason to deny you access at 50 or onwards. If the scheme is a Defined Benefit scheme, the trustees can sometimes refuse to allow you early retirement if the scheme isn't in good financial health.

Ok thanks for that

 

[coolaboola12]

And is it possible to cash in the whole pension at 50? I have seen lots of sites say you can only take the 25% tax free part and must invest the rest in annuity or arf

What If I wanted to draw the whole thing down at 50 as taxable , let's say I had a cash emergency

 

[Dave Vanian]

And is it possible to cash in the whole pension at 50? I have seen lots of sites say you can only take the 25% tax free part and must invest the rest in annuity or arf

What If I wanted to draw the whole thing down at 50 as taxable , let's say I had a cash emergency

You can. First 25% is tax free (subject to your lifetime limit of €200,000) and the balance can be withdrawn in a lump but will be taxed as if it was earned income in the year you draw it. Again this assumes you're in a DC scheme and not a DB.

 

[Kev1964]

In a Defined Contribution pension scheme where you have a fund built up that's ringfenced for you alone, the trustees would have no reason to deny you access at 50 or onwards. If the scheme is a Defined Benefit scheme, the trustees can sometimes refuse to allow you early retirement if the scheme isn't in good financial health.

My wife has an old hybrid Aviva Pension meaning it’s part DC and part DB. We enquired of the administrators a few years ago about access after age 50 and were told no, the trustees were not currently allowing this to happen, presumably for the reasons you say Dave. That situation has now changed and early access is possible if we agree a cash equivalent of the DB benefits. I wonder why that wasn’t offered earlier. Anyway it’s all irrelevant now as the DB element has been revalued upwards and the current cash offer is only about 13 times the annual income benefit. We think it’s better to leave things as they are for now.

 

[Dave Vanian]

My wife has an old hybrid Aviva Pension meaning it’s part DC and part DB. We enquired of the administrators a few years ago about access after age 50 and were told no, the trustees were not currently allowing this to happen, presumably for the reasons you say Dave. That situation has now changed and early access is possible if we agree a cash equivalent of the DB benefits. I wonder why that wasn’t offered earlier. Anyway it’s all irrelevant now as the DB element has been revalued upwards and the current cash offer is only about 13 times the annual income benefit. We think it’s better to leave things as they are for now.

On the assumption that your wife is in good health, then she should reasonably expect to live for longer than 13 years after retiring based on current longevity norms. There's still the fact to be considered that, unless the DB scheme buys her an annuity when she retires, she remains dependent on the ability of the DB to continue paying her pension until she dies. It's a personal choice but some people might take the "bird in the hand" now and invest it until retirement. Others won't. No right or wrong answer to these ones.