Pension to pay off debt?

ronny2jags

Hello, new to this. After reading the advice on the website, Martin seems to think that paying off debt with savings is a good idea. Can someone help and answer if that also includes pension contributions.
I have changed jobs recently and need to transfer the pension to my new company and have noticed that I couls almost become debt free if I use this money to pay off the debt instead of transferring it.

Help please

immoral_angeluk

Depends really.. how old are you.. how much is your debt and how much would you get from pension contributions?

Imelda

I don't think you would get the full amount, I maybe wrong (and quite often am!) but I think you can only claim back your contributions (not your employer's) and then they will be liable to tax.

Have you asked on the pension's board, they know everything there is to know about this kind of thing.

CLAPTON

normally you can only withdraw money from a pension at pension age (normally 50 or 55 and then a maximum of 25%) or you can withdraw your contribution if you have less than 2 years in the scheme...so first check that you are allowed to do this.
if you have a limited pensioned service and so can withdraw money, then check carefully how much you would get back: you normally can't withdraw the employers contribution and also the tax man will take a lump too.

Xbigman

Even if it works out that you can withdraw money the typical cost to you will be 22% tax and 20%ish transfer fee. Throwing 42% away in one go is usually a bad idea.
Regards



X

EdInvestor

Hi Xbigman

Xbigman wrote:

Even if it works out that you can withdraw money the typical cost to you will be 22% tax and 20%ish transfer fee.

What do you mean by transfer fee exactly?