You may be able to access a lump sum before your retirement when you have personal pension savings or employment pension. This is normally possible once you turn 55. However, is it a good idea to use your pension savings to clear your debts?
Previously, you could take up to 25% of your pension savings through a tax-free lump sum amount. However, since the 2015th of April, circumstances have changed. Several people would take out their pension in cash before they even enter retirement.
Can I use my pension savings to repay debts?
If you are eligible to secure a lump sum amount from your pension, this may be a quick way for you to clear your debts. For some, this might be a great opportunity. However, this can mean less available funds during your retirement years. The money you took from your pension as your approach 55 could mean a reduced income for your entire life as you enter retirement.
Before you consider this idea, it’s always best to seek debt advice. We can help you determine whether certain alternatives can better solve your debt problems. It is best to weigh in your options and get a clear understanding of your circumstances before sacrificing the savings on your pension.
Where can I get guidance with pensions?
There are two available aids concerning pensions depending on the kind of help that you need. These as follows:
General Pension Information
These are organizations that are supported by the government. It provides facts that you need before making decisions relating to your pension. However, they cannot determine whether taking out the money from your pension is suitable based on your current and future finance.
The PensionAdvisory Service or TPAS – you may contact 0300 123 1047 or check their website for further information. They’re open Monday to Friday, from 9 AM to 5 PM.
Pensionwise – they have face to face appointments concerning general pension information
Regulated Financial Advice
This aid is provided by an independent financial advisor or an IFA who can administer specific advice about your circumstances. An IFA can lead you towards better choices on what is best on your pension. Moreover, they can further suggest precise types of annuity or investment. Mostly, you’ll have to pay for an IFA’s assistance.
MAS or Money Advice Service can give you a useful guide in choosing your financial advisor through their website. Also, it incorporates ties to other sites to assist you in locating a local IFA. You can also call on 0300 500 5000, from Monday to Friday from 8 AM to 8 PM and on Saturdays between 9 AM to 1 PM.
We can help you explore your choices if you are uncertain whether it’s ideal for you to use your pension savings in paying off your debt.