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    • Fireflyaway
    • By Fireflyaway 3rd Dec 17, 8:18 PM
    • 1,365Posts
    • 1,381Thanks
    Fireflyaway
    Stopping pension to clear debt
    • #1
    • 3rd Dec 17, 8:18 PM
    Stopping pension to clear debt 3rd Dec 17 at 8:18 PM
    I'm thinking of stopping my pension in order to use the extra income to pay off debt. I'm just not getting anywhere fast the way things are. My pension contribution is 6.5% but my employer pays in 14.8% and that seems a lot to sacrifice. It would only be temporary though.

    My debt is £800 on an old catalogue and 2 overdrafts and 2 credit cards ( all current) total of those is around 4k.

    Should I not worry as I haven't defaulted or should I get serious and wipe them out? Stopping my pension would give me an extra £140 or so a month.
Page 1
    • sourcrates
    • By sourcrates 3rd Dec 17, 8:35 PM
    • 12,714 Posts
    • 12,055 Thanks
    sourcrates
    • #2
    • 3rd Dec 17, 8:35 PM
    • #2
    • 3rd Dec 17, 8:35 PM
    Hi,

    £4000 quid is a pretty small debt to be honest, trust me, you don’t want to scrimp on your pension, when you think the most you will get will be around £700 a month on the state pension, having a private one to fall back on is going to be invaluable.

    All through my 20’s/30’s/40’s etc I put off paying into a pension, I did however, opt out of serps back in the 80’s, so now I’ve just passed 50 I have a few grand in my private pension, but wish I’d saved more.

    Basically £4000 is nothing, don’t compromise your future for it.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • theoretica
    • By theoretica 3rd Dec 17, 9:23 PM
    • 4,949 Posts
    • 6,190 Thanks
    theoretica
    • #3
    • 3rd Dec 17, 9:23 PM
    • #3
    • 3rd Dec 17, 9:23 PM
    If you pay the 4k off your debt with money which would have gone into your pension it will cost you over 8k extra from your employer, over 12k in total. Unless you have a sky high interest rate on the debt or vital deadline to be debt free it is not financially wise.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
    • tori.k
    • By tori.k 4th Dec 17, 7:26 AM
    • 2,924 Posts
    • 6,680 Thanks
    tori.k
    • #4
    • 4th Dec 17, 7:26 AM
    • #4
    • 4th Dec 17, 7:26 AM
    Why not post up a SOA, of all your outgoings I'm sure like most of us you could find a few savings within your current outgoings to help service your debt.
    Debit to Credit (stage 1) 3652.34 completed 15/10/16
    Debit to Credit (stage 2) 6299.09 completed 25/06/17
    Last Castle 150,000/ 25300
    • fatbelly
    • By fatbelly 4th Dec 17, 8:02 AM
    • 11,652 Posts
    • 8,783 Thanks
    fatbelly
    • #5
    • 4th Dec 17, 8:02 AM
    • #5
    • 4th Dec 17, 8:02 AM
    For 4k of lowest-priority debt I wouldn't mess with your pension.

    As you haven't defaulted your credit history may be ok. How about a new bank account - one that does an introductory 9% overdraft - and/or a 0% money transfer card.

    https://www.moneysavingexpert.com/banking/compare-best-bank-accounts#overdrawn

    https://www.moneysavingexpert.com/loans/cut-loan-overdraft-costs
    • ReadingTim
    • By ReadingTim 4th Dec 17, 11:05 AM
    • 2,227 Posts
    • 3,152 Thanks
    ReadingTim
    • #6
    • 4th Dec 17, 11:05 AM
    • #6
    • 4th Dec 17, 11:05 AM
    14.8% is a very generous employer contribution - you'd be losing more than twice what you 'save' by stopping.

    Post up a statement of affairs (SOA) for people to make suggestions as to where you can cut back - expensive mobile phone contracts and Sky TV are usually good places to start.
    • Fireflyaway
    • By Fireflyaway 4th Dec 17, 5:21 PM
    • 1,365 Posts
    • 1,381 Thanks
    Fireflyaway
    • #7
    • 4th Dec 17, 5:21 PM
    • #7
    • 4th Dec 17, 5:21 PM
    Thanks all.
    I think I'm pretty good with budgeting. Not sure I can save much more. I've switched power supplier, got a basic TV package, don't have a car payment etc. No gym membership, don't smoke. I don't think my income or budgeting plan is to blame, its probably my discipline in not following it! I have just changed jobs and now have a better income. Some of the debt is from when I had less coming in.
    I just got annoyed with myself and wanted to get rid of the debt but now reading the advice I see stopping a pension would lose more in the long run.
    • enthusiasticsaver
    • By enthusiasticsaver 4th Dec 17, 6:37 PM
    • 4,856 Posts
    • 9,177 Thanks
    enthusiasticsaver
    • #8
    • 4th Dec 17, 6:37 PM
    • #8
    • 4th Dec 17, 6:37 PM
    I would not touch your pension especially for such a relatively small debt.
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
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