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Pension Pots Raided For £1.8Bn Apparently

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http://www.dailymail.co.uk/news/article-3166792/We-ve-gone-pension-potty-ve-raided-pension-pots-staggering-1-8billion-just-two-months-rules-changed-s-how.html

We've all gone pension potty! We've raided our pension pots by a staggering £1.8billion in just two months since the rules changed... and here's how!
  • People have taken £1.8billion out of their pension pots since rule change
  • Some have helped children, pay for health treatments, or invested
  • Others have splashed out on cosmetic surgery, dream holiday and hobbies
  • The Mail On Sunday speaks to five couples who have raided their pension pots

It's the chance of a lifetime. A dramatic new rule change has given savers unprecedented access to their pension ‘pots’ and thousands have responded, keen to realise their dreams before it is too late.

For some, the choices are practical – helping children, paying for health treatment or investing in the booming buy-to-let market.

But others have used part or all of their pension fund in more flamboyant style, splashing out on cosmetic surgery, dream holidays or expensive hobbies.

..

So far, £1.8 billion has been withdrawn from pension funds in the first two months of the new laissez-faire regime. The key to the rule change is that rather than being forced to buy an annuity – an investment which pays out a set pension every year – workers over 55 can spend their lump sum savings as they choose.

Many experts predicted a dangerous spending binge with people plundering their funds in search of the good life. Yet early evidence suggests that they got it wrong, and the amount withdrawn is less than many feared.

BTL promotion?

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Ripping a pension out in full to get into BTL is probably one of the least tax efficient investments ever.

On a decent size pension, not only will you pay 40/45% tax on most of the pension ripped out, but then you are taxed on the rent and Capital Gains Tax of 18%/28% when the house is sold. Also liable to IHT if you die owning the house (unlike pension in some circumstances).

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If I had the opportunity to move my pension money outside of a pension wrapper, especially a tax free lump sum right now, I would. You just don't know when or how the rules will change and I can completely understand people wanting to seize an opportunity to take more tangible control of their money.

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If I had the opportunity to move my pension money outside of a pension wrapper, especially a tax free lump sum right now, I would. You just don't know when or how the rules will change and I can completely understand people wanting to seize an opportunity to take more tangible control of their money.

I quite concur. Once the tax free lump sum iz within my grasp, its out of the wrapper.

So what we really need to know is how many idiots out there are genuinely blowing the rest and paying 40/45% tax on these withdrawls. I can't imagine being that stupid, but this is the general public we are talking about so i imagine it is actually > 0.

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The £1.8bn figure is misleading, because most of it is money re-invested in long-term income products other than annuities.

It's the trivial-sized pots that are being taken out. And the 25% tax-free lump sums going on all those things like paying off debt, and BoMD university fees and house deposits.

Might do all that myself. Just now I have three pension pots, including one that's under £10k which I may just cash in (if I don't get around to merging it into the main one first). The third is a public-sector one, so I'll definitely keep that, despite it being tiny (I worked just over two years on that job).

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My partners workmates partner has cashed his pension in (£40k) and used it to buy a BTL (his partner put the other £30k).He is on incapacity benefit but will still see a big tax bill for taking it out in one go.He said he wasnt bothered about the tax bill he would sleep easier knowing it was safe in a property.

He has no other pensions.Nice bloke,but his pension now relies on half the rent (roughly £190 a month) from a single BTL.

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My partners workmates partner has cashed his pension in (£40k) and used it to buy a BTL (his partner put the other £30k).He is on incapacity benefit but will still see a big tax bill for taking it out in one go.He said he wasnt bothered about the tax bill he would sleep easier knowing it was safe in a property.

He has no other pensions.Nice bloke,but his pension now relies on half the rent (roughly £190 a month) from a single BTL.

In Co. Durham/Darlo?

Good luck. The only tenants private LLs tend to get are the ones the council do not want anymore.

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