Need cash before retirement.

cashflow

I'm due to retire in August, when I turn 65. I need £20000 cash as soon as possible. My old work pension is with Prudential, but it is underfunded by about 25%. The estimate for it to be fully funded again is 2017.

Can anyone advise me which of the following would cost me the least, please ( let's assume I live until I'm 90 ):
transfer the pension now and release £20000 from it?
obtain equity release from my home?
try to get a loan...or is that unlikely, given that I'm unemployed.

dunstonh

My old work pension is with Prudential, but it is underfunded by about 25%. The estimate for it to be fully funded again is 2017.

What type of pension is it? Is it a section 32 buy out bond?

Bigmoney2

If you are unemployed are you claiming all your entitled to?
I think if your over 60 you can claim pensiion credit rather than JSA, this in turn may open doors to other benefits, council tax benefit, housing benefit (if renting).
Have you had a forecast on the old company pension?
I would contact them for an estimate of likely income, is it a final salary or money purchase scheme.
Really need more details to help further.

Have a look at one of the benefit calculators
http://www.turn2us.org.uk/benefits_search.aspx

atush

I'd like to know what the 20K is for. Not because we are nosy but because there are differences between debt/funding of cancer drugs and splashing out on a new car/cruise or investing in somthing dodgy thatr we need to talk you out of.

cashflow

Bigmoney2 wrote: »

If you are unemployed are you claiming all your entitled to?
I think if your over 60 you can claim pensiion credit rather than JSA, this in turn may open doors to other benefits, council tax benefit, housing benefit (if renting).
Have you had a forecast on the old company pension?
I would contact them for an estimate of likely income, is it a final salary or money purchase scheme.
Really need more details to help further.

Have a look at one of the benefit calculators
http://www.turn2us.org.uk/benefits_search.aspx

Thank you for your reply. The government allowances would not go far enough - I have lchecked what would be available in my case.

The only job possibility I've had recently is on a retainer basis, and an hourly rate if I actually do the work. It's not something I can rely on, and I have the usual outgoing direct debits every month...plan for the worst!

cashflow

dunstonh wrote: »

What type of pension is it? Is it a section 32 buy out bond?

I'm outwith the U.K. until mid March, so I don't have my pension documents with me. I did contact an IFA just before the financial crisis some years ago, and the cash that was available to me f I transferred my pension was more than £20000.

cashflow

atush wrote: »

I'd like to know what the 20K is for. Not because we are nosy but because there are differences between debt/funding of cancer drugs and splashing out on a new car/cruise or investing in something dodgy that we need to talk you out of.

The cash would be used to fund my outgoings each month if I do not find work. In my line of work 65 is the maximum age allowed. If I get work locally that would be perfect, but indications are not positive at the moment.

dunstonh

I did contact an IFA just before the financial crisis some years ago, and the cash that was available to me f I transferred my pension was more than £20000.

Which suggests it is a section 32 buy out bond or hybrid scheme. If you transfer those into a personal pension you lose the guarantees but can get paid the 25% of the residual transfer value. For rare cases that can be a good thing where tax free cash is less than 25% and there are no guarantees or guarantees can be met with alternatives. However, for most, the loss of the guarantees can be very expensive and there is often a break even point. It will depend on where that breakeven point is that really matters.

jamesd

Of the options you've given, equity release may well be the cheapest. You might also discuss this with your bank to see whether they would consider an overdraft facility or personal loan to be repaid from the pension lump sum later this year. If you can get that it would probably be the cheapest available option.

You may also have £20,000 in available credit from credit cards, or sufficient to dramatically reduce the actual need for cash. This could be cheaper still.

This would be an ideal use case for 0% purchase credit card deals but when unemployed you won't get a new deal.

atush

I just found an old card that we dont use with a 10K facility. We never took that out- they must have raised it.

Bigmoney2

I would also do an SOA and see if you can reduce your outgoings at all
Maybe consider downsizing house (rather than equity release)
Sell stuff on ebay/carboot?
Is the 20k needed now or a projection of what you'l need to cover costs in future.
I also find it useful to log al my spending so I can see where everything goes, maybe worth doingg to see if you can cut costs