Should I stop paying in to my pension while I clear my debts?

Penny_Pinch_3 · 18 April 2007 at 5:11PM

Hiya all. This is my first post, I hope it's in the right place! I work in education and I have a local authority pension which I pay into every month - £91 which is about 9% of my income - and which I know almost nothing about. I also have an overdraft of about £1000 which I have just transferred to egg for a few months 0% interest. You can see i don't have the worst debt problem ever but I hate paying that interest to the bank. Is it worth stopping my pensions payments for 9 months to pay off my overdraft?

tyllwyd · 18 April 2007 at 5:16PM

I'm not an expert on pensions, but I often lurk on the pensions board, and I've seen the local authority pension mentioned as a really good deal. Before you make a decision, I think you should ask on that board, because they can put it into context for you in the longer term. The biggest danger is that if you stop your pension payments now for a relatively trivial debt, and then don't get round to starting again, you could be massively worse off when it comes to retirement.

Mrs_J_3 · 18 April 2007 at 5:16PM

I'd say no. My pension pot is for my future, and that will be the last thing to be sacrificed in the name of debt.

You've got a smallish debt, which with some rearrangement of spending habits could be paid off quickly. Post an SOA and see if people on here can come up with ideas to free up some money.

CLAPTON · 18 April 2007 at 5:27PM

continue with the pension... local authority pensions are the rolls royce of pension.. also you wont get back 91 pounds back either because you will pay more tax and NI.

Dithering_Dad · 18 April 2007 at 5:32PM

NO! absolutely not. Local authority pensions are one of the best around. If you stop contributing, the extra money you'll get will be hit by tax and national insurance, reducing it by a quarter. You'll also lose any contributions that your employer puts in.

Unless you're completely on your uppers, I'd leave it in place. You probably end up losing more by stopping the contributions than you would be continuing.

Donedoingdebt · 18 April 2007 at 6:34PM

You may find that you have a life insurance policy linked to your pension payments. Once you stop paying, in a lot of cases this policy will cease & will not restart even when you start paying toward your pension again.

Should I stop paying in to my pension while I clear my debts?

Comments

Confirm your email address to Create Threads and Reply

🚀 Getting Started

Categories

Is this how you want to be seen?

Get our FREE Weekly email full of deals & guides - and it’s spam-free