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  • FIRST POST
    • luvpenguins
    • By luvpenguins 29th Nov 17, 10:19 PM
    • 39Posts
    • 48Thanks
    luvpenguins
    Yikes! I'm making the call tomorrow
    • #1
    • 29th Nov 17, 10:19 PM
    Yikes! I'm making the call tomorrow 29th Nov 17 at 10:19 PM
    I am 55 in January, and I believe I will have access to 25% of my pension tax free then.

    A little background. I have been a single mum to two wonderful boys since 1996. The boys are now grown up and following good careers, we managed OK over the years with little to no input from their dad, but it was hard managing a very demanding full time job and two growing boys. Thank god for mums, I couldn't have managed without her help.

    Anyway. I have some debt, about £15,000 over 0% credit cards, and I also have £60,000 to pay on my mortgage. Currently, it is due to be paid when I am 67, so in 2029

    The house is worth about £180,000.

    I have worked ever since I was 16, and all my NI payments are up to date. I have worked for my current employer since 1993, starting with a final salary pension. It was changed to a defined benefits pension sometime in the mid 2000s, not sure when. I also paid some AVCs for a while.

    This is my plan. I ring HR pensions tomorrow and find out if I can withdraw £15,000 (tax free) in January so that I can pay off my debts. The money that I pay towards those debts I will pay towards my mortgage instead (I checked, I can overpay) and so bring that debt down more quickly. I'm hoping to double my current mortgage payment of £571.00 to about £1071.00.

    If it matters, I earn £3019 per month before tax, I have a company car though, so not sure whether benefits in kind will make any difference, and I have been paying into the company pension plan for yonks at a percentage of which I don't know right now, but I will check tomorrow.

    I know nothing about pensions, so my questions are:

    Is this going to be possible?

    Do you think I will have £15,000 available from my pension pot?

    Is this a stupid idea?

    Will I need to employ a financial adviser at huge cost to steer me through this?

    Sorry if I am waffling, I might be able to provide more figures tomorrow when I have made the phone call.

    Thanks for reading, at the least there might some other woman out there who hasn't a clue as to how to move forward but who wants a bit of a lifestyle change sooner rather than later

    xx
Page 1
    • Browntoa
    • By Browntoa 29th Nov 17, 10:23 PM
    • 31,942 Posts
    • 37,677 Thanks
    Browntoa
    • #2
    • 29th Nov 17, 10:23 PM
    • #2
    • 29th Nov 17, 10:23 PM
    Not all pension schemes allow you to do it

    Who is the pension with
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • luvpenguins
    • By luvpenguins 29th Nov 17, 10:25 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    • #3
    • 29th Nov 17, 10:25 PM
    • #3
    • 29th Nov 17, 10:25 PM
    Oh, that's a blow. I don't know, I'll find out tomorrow. Thank you anyway
    • zagfles
    • By zagfles 29th Nov 17, 10:26 PM
    • 12,495 Posts
    • 10,496 Thanks
    zagfles
    • #4
    • 29th Nov 17, 10:26 PM
    • #4
    • 29th Nov 17, 10:26 PM
    I suggest a chat with Pensionwise, free government helpline: https://www.pensionwise.gov.uk/en
    • luvpenguins
    • By luvpenguins 29th Nov 17, 10:33 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    • #5
    • 29th Nov 17, 10:33 PM
    • #5
    • 29th Nov 17, 10:33 PM
    I had a quick look, I need to find out a bit more about the supplier, which I will do tomorrow. Thanks for the link though, I'll go back when I've got more info.
    • Alexland
    • By Alexland 29th Nov 17, 10:51 PM
    • 731 Posts
    • 461 Thanks
    Alexland
    • #6
    • 29th Nov 17, 10:51 PM
    • #6
    • 29th Nov 17, 10:51 PM
    If the credit card debt can run at 0% and the mortgage rate is low then there's no hurry to make a decision. Get all the facts first.

    On what you have described it seems possible to try and both repay your credit card and overpay your mortgage from income over the next few years without raiding your pension pot and reducing your income in retirement.

    Does your company offer a cash option instead of taking the car? If your mileage is low it can work out cheaper to just own a second hand car for 3 years.

    Even if it's not quite possible the pension funds will have had a good chance to grow and inflation will have erroded the real value of the debt so it will feel a smaller balance to clear.

    Alex.
    Last edited by Alexland; 29-11-2017 at 11:01 PM.
    • luvpenguins
    • By luvpenguins 29th Nov 17, 10:59 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    • #7
    • 29th Nov 17, 10:59 PM
    • #7
    • 29th Nov 17, 10:59 PM
    Thank you Alexand, but I can't do both. The credit card debt is stopping me from putting that money towards the mortgage, which is why I would like to get rid of it. I pay £500 ish towards CCs, I want to be debt free and pay that 'extra' money to the mortgage.
    • luvpenguins
    • By luvpenguins 29th Nov 17, 11:04 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    • #8
    • 29th Nov 17, 11:04 PM
    • #8
    • 29th Nov 17, 11:04 PM
    Plus, re the car, I have a new one next year in March, it is a hybrid electric petrol BMW thing, I am told my tax will go right down, and I am going to go for paying my own mileage at 11p per mile, so that will help from May 2018.

    I will need lessons on how to drive the thing though.
    • Alexland
    • By Alexland 29th Nov 17, 11:05 PM
    • 731 Posts
    • 461 Thanks
    Alexland
    • #9
    • 29th Nov 17, 11:05 PM
    • #9
    • 29th Nov 17, 11:05 PM
    If you able to put £500 towards either the credit card or mortgage overpayment each month for the next 7 years (to the age of 62) then that's £42k which alongside your regular mortgage repayment should clear most of it?
    • luvpenguins
    • By luvpenguins 29th Nov 17, 11:16 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    No. I currently pay £500 towards the credit cards. I want to pay them off, with a lump sum from my pension, so that I can put that £500 towards my mortgage. That is my question.
    • Alexland
    • By Alexland 29th Nov 17, 11:33 PM
    • 731 Posts
    • 461 Thanks
    Alexland
    In which case as per Browntoa's feedback it depends on the rules of your scheme so you will need to investigate.
    • cloud_dog
    • By cloud_dog 29th Nov 17, 11:55 PM
    • 3,304 Posts
    • 1,863 Thanks
    cloud_dog
    All of the below is subject to what the pension and scheme rules are but...

    Not many company pension schemes allow you to take your pension a) early at all (ignoring health situations), or b) early without significant reduction in the pension itself.

    You mention a couple/few pensions, defined benefit (final salary), defined contribution, and AVCs.

    You need to find the rules for the three.
    The normal pension age for the three.
    What are the sizes of pots for the DC and AVC pots?
    For the DC and the AVC is it possible to transfer those to another provider.

    This last bit may allow flexibility if you cannot commence your pension until normal retirement age (perhaps 65). If you are desperate to withdraw capital from your pension(s) early, by transferring the DC and/or AVC, or part of it, to a SIPP you could access the money at age 55 (currently).

    As others have said you need to find out and provide much, much more information.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • atush
    • By atush 30th Nov 17, 12:11 AM
    • 16,374 Posts
    • 10,132 Thanks
    atush
    If this is a FS/DB schheme i dont think you can aces the TFLS early. You might on the AVCs.

    So really you need to overpay the CCs if you want out of debt, but if they are 0% it might mean you are better off overpaying but from income

    Or you could get the cash your dead beat dad owes you. Use that to pay off the CCs you ran up raising his kids.
    • dunroving
    • By dunroving 30th Nov 17, 10:16 AM
    • 588 Posts
    • 283 Thanks
    dunroving
    I'd say take a deep breath and don't make any rushed decisions. Your thread title and first post smack of panic and there is no need to panic.

    I can see why you want to pay off the credit card debt, just because CC debt "doesn't feel good" It's a strange thing, but when you think about it, debt is debt. The negatives about CC debt are really (IMO) because of the assumptions about how it was built up, i.e., on frivolous toys, holidays, etc., whereas of course a house is a respectable thing to buy. Also, CC debt is usually at a higher interest rate.

    Forget those preconceptions and ask yourself why it is so important to pay off the CC debt and whether it justifies drawing from your pension before you retire.

    Whether or not your work scheme rules allow an early withdrawal, I'd say leave the pension where it is, and just focus on paying off the CC debt. It's 0% (at the moment), so it isn't costing you anything, whereas the £15k in your pension is earning you money. Simple maths says leave it where it is.
    • Spreadsheetman
    • By Spreadsheetman 30th Nov 17, 10:35 AM
    • 52 Posts
    • 43 Thanks
    Spreadsheetman
    I'd say take a deep breath and don't make any rushed decisions. Your thread title and first post smack of panic and there is no need to panic.

    I can see why you want to pay off the credit card debt, just because CC debt "doesn't feel good" It's a strange thing, but when you think about it, debt is debt. The negatives about CC debt are really (IMO) because of the assumptions about how it was built up, i.e., on frivolous toys, holidays, etc., whereas of course a house is a respectable thing to buy. Also, CC debt is usually at a higher interest rate.

    Forget those preconceptions and ask yourself why it is so important to pay off the CC debt and whether it justifies drawing from your pension before you retire.

    Whether or not your work scheme rules allow an early withdrawal, I'd say leave the pension where it is, and just focus on paying off the CC debt. It's 0% (at the moment), so it isn't costing you anything, whereas the £15k in your pension is earning you money. Simple maths says leave it where it is.
    Originally posted by dunroving
    +1 to that. Leave the pension alone unless there is a dire emergency.

    Based on the amounts and timescales why not clear the CC debt and make the most of the 0% deals, then switch to overpaying the mortgage. It looks like you could pay a lot of it down and then clear the rest with the PCLS well before it ends (assuming you can take PCLS at 65).

    Is the credit card debt likely to go up again, or is that a one-time thing?
    • TcpnT
    • By TcpnT 30th Nov 17, 10:55 AM
    • 41 Posts
    • 25 Thanks
    TcpnT
    As others have said you need to slow down and fully consider all your options and the future implications of each. From what you have said there is no real time pressure in this case.

    Make that phone call to HR by all means but instead of telling them that you want to access you pension early take the opportunity to request full information about all the pension benefits that you have so far accrued. Ask for details and statements for each part of the scheme. When you have all this information take the time (months probably) to fully digest and understand it and then research your options using resources such as this forum and many other freely available sources of information. Knowledge and understanding is vital. A snap decision now could have long lasting effects on your future income and standard of living.
    • LHW99
    • By LHW99 30th Nov 17, 5:23 PM
    • 992 Posts
    • 850 Thanks
    LHW99
    What interest rate is your mortgage on, and is it fixed or variable?
    Things to consider while paying off the cc / getting info on your pensions would be:
    Can you reduce the interest rate on the mortgage?
    Alternatively could you fix the rate, say with a five or ten year fix, to protect you from possible future interest rate increases?
    • luvpenguins
    • By luvpenguins 30th Nov 17, 9:35 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    Deep breath. Thank you to all of you who have read my post and replied. So, I rang HR this morning. I had a bit of a wobbly, because they could only find my current pension, apparently my 15 years working for the firm before it was taken over disappeared!

    Anyway, this is what I found out. I have earned approx £35,000 in one pension, so if I wanted to, and having looked at your replies I may not want to now, but if I did, I could take out 25%, which is about half of what I want to pay off. I asked,and I can do that.

    Eventually, after ages, I was given a number to call about my pension from the firm I worked for that was taken over. It was a very strange call, but this bloke said he would try to get my details posted to me before christmas. This is my final salary pension details, so I'll have to see what is going on with that when I get the details.

    Thank you all, I still think I want to pay off my debts with this money! If I don't, I feel it will be around me forever. And my mortgage is bothering me. Yes, my ex has a lovely mortgage free house with his new wife and stuff, but it has only ever been me paying my way, I'm sick of being in debt, I want to get rid of it! I just see this as being my only way out. Unless I win the lottery, or meet a rich (blind) man.
    • luvpenguins
    • By luvpenguins 30th Nov 17, 9:37 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    LHW99, |I just got my mortgage thing through today, I am paying 3.00% interest on my mortgage. I wouldn't want to mess with this, I can pay it down if I want, which I intend to do. Thank you for your reply x
    • luvpenguins
    • By luvpenguins 30th Nov 17, 9:53 PM
    • 39 Posts
    • 48 Thanks
    luvpenguins
    Or you could get the cash your dead beat dad owes you. Use that to pay off the CCs you ran up raising his kids.

    thank you to whoever put that, I love you
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