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Stakeholder pensions

I am a full-time GP who several years ago opened stakeholder pension schemes for my wife and I and our three children. I have contributed approximately £7,000 to them, but the projected pension values are pitiful. My circumstances have changed and I now wish to cash in these stakeholders so that I can use the money now. I am unable to establish if it is possible to cash a pension in order to 'unlock' the value. I have received conflicting advice with one source saying 'No you can't, as you got tax relief on the contributions' and someone else saying 'Yes, but the value of the pension pot will reduce as you got tax relief on the contributions'. Which is correct?

I regret to say that under current legislation, benefits from the majority of pension schemes including stakeholder plans cannot be taken until the individual in whose name the scheme is reaches age 50 at the earliest (increasing to age 55 from 6 April 2010).

In most cases, the maximum tax-free lump sum that can then be taken is 25 per cent of the pension fund value with the remaining 75 per cent being used to provide an income.

There are 'triviality' rules which, subject to the overall pension fund being worth less than 1 per cent of the prevailing lifetime time allowance limit when benefits are taken, allow individuals between the ages of 60 and 75 to take the total pension fund as lump sum subject to 75 per cent being taxed at their highest marginal rate.

The restrictions placed on the time and manner in which pension benefits can be taken are, essentially, the price you pay for the tax breaks on contributions.

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