Equity release from Pension for F&F ?

999frogs

Not sure whether the relevant legislation is all in place yet but as I understand it there will be an option from April 2015 to take a lump sum from your pension if you are 55 or over.
If this is correct, would it make sense to do this for a F&F (17 months of 72 left by this stage), and to then increase pension contributions with what would have been the IVA payments ?

TIA

longtermplanner

No this doesn't make sense.

A F&F at a signifiacntly lower amount would only be likely to be accepted if you are struggling. There is no point in a F&F not at a low amount because all the interest is frozen on your debts, so you wouldn't gain anything by clearing them earlier.

You can't take money out and then plan to pay more into your pension, this is likely to be caught by the so-called pension recycling rules, designed to stop tax avoidance,.

999frogs

longtermplanner wrote: »

No this doesn't make sense.

A F&F at a signifiacntly lower amount would only be likely to be accepted if you are struggling. There is no point in a F&F not at a low amount because all the interest is frozen on your debts, so you wouldn't gain anything by clearing them earlier.

You can't take money out and then plan to pay more into your pension, this is likely to be caught by the so-called pension recycling rules, designed to stop tax avoidance,.

Thanks for the response. Even without paying back in (point taken), clearing the IVA with a F&F 12 months early still has some appeal.

longtermplanner

What is the appeal if it wouldn't be at a significantly reduced rate? The IVA will remain on your credi record for 6 years from its start even after a F&F.

Also you need to think about your tax situation. Take money out now whilst you are still working and you may well pay higher rate tax on it. Wait until you retire and you may not.