Pension release to pay mortgage?

sheffieldsue

Please could anyone offer advice or experience to help us with this dilemma.

We know it's not usually a good idea to take a pension early but:

• my husband (age 55) and I are unemployed (despite doing all the right things - e.g. each applying for a job a day for the last six months ... before anyone starts!)
• our largest outgoing is our mortgage
• the 25% of his pension cash we can take now would, together with a recent windfall, completely pay off our mortgage.

So I've two questions, really:

1. Can anyone see any downsides in our situation?
2. Do we really need to pay an advisor or agency or is it possible to unlock a pension directly with the fund management company?

Thanks in advance for any ideas.

dealer_wins

I would see a professional financial adviser.

Immediate thoughts are can you live on the reduced pension amount. Will any benefits be affected/lost.

Fruit_and_Nut_Case

Welcome to MSE :hello:

Probably better to ask on The Pensions, Annuities & Retirement Planning Board

sheffieldsue

Dealer Wins - probably can manage on rest of his pension plus bits and bats of mine. The social don't cover our full mortgage interest, let alone capital payments at present! Don't know what other benefits might be affected.

Sorry Fruit and Nutcase - will post on the pensions forum. Sorry to post in the wrong place - can only plead I'm a newbie!

Voyager2002

If you take early retirement, presumably the amount of pension each month will be less than if you had waited until retirement age. Furthermore, receiving a pension would probably make it impossible to receive JSA.

CLAPTON

I know little about benefits but
do you have any benefits that depend upon your finances such that the windfall and pension lump sum might adversely affect them ? if so then paying the mortgage off may be construed as deliberately depriving yourself of assets with the intention of claiming benefits

that aside, I think that paying the mortgage off would be a great idea in your circumstances assuming that taking the pension early is simply an acturail adjustment (presumably its a defined contribution scheme)

in general it would probably be in your interest to look around for the best annuity rates rather than going with your penson manager

[Deleted User]

if you take the 25% the dwp will assume even if you dont that you have also taken the pension and this could seriously affect your benefits,if you are struggling with the mortgage after the benefits paid towards them you have a number of options
1)ask the lender to convert to interest only for a period
2)ask them for a payment holiday
3)if you have equity you could do as we did,sell up and buy something much smaller for cash