Withdrawing cash from existing annuity

economan

Will it be possible to withdraw cash from an existing annuity? I have been retired 9 years and have a personal pension (from an annuity) of about £160 per calendar month (£128 after tax). I have about £10,000 of debt in a bank loan, overdraft and credit card - all with the same bank.

If I could clear all these with money from my annuity I could reduce more monthly outgoing (loan repayments and debt interest) than my £128 monthly pension income. I would be about £70 per month better off and could manage better with my state pension than I do now.

Does anyone know if cash can be withdrawn from an existing pension under the new pension rules?

sandsy

At the minute, it's just a proposal which is being considered and if it becomes effective, it will only happen next April, 2016. But there's no guarantees that it will happen or that even if it does happen, all annuity providers will make it work in practice.

atush

No chance of this coming to pass if the conservatives aren't returned to office. And if it does, AND YOU SELL YOUR PENSION to get out of debt- how will you keep yourself from falling into debt on 40 quid less per week?

You need help from the Debt free forum.

economan

Thanks, sandsy and atush for your helpful replies.

I accept your point, atush, about keeping out of debt after losing my personal pension. At present I am getting £162 gross per month from this pension, which is £128 net of tax - about £32 per week. My debt outgoings are about £40 per month from interest on an overdraft and credit card (varying according to the amount owed) plus £160 per month repayments on a bank loan for another 54 months (at 10% APR). So my total debt outgoings are about £50 per week.

My logic was that if I could withdraw enough cash from my annuity pension to clear the overdraft, credit card and bank loan - total about £10,000 - I would be better off by £18 per week (£50 gained minus £32 lost).

My income would then be my State Pension - plus two small annuity payments totalling about £410 per year. I agree that I would have to budget carefully to avoid getting into debt again, but it is difficult to control the outgoings with debt payments being present. Last year, I replaced a partly-paid-off bank loan with a new one of £7500 to clear the overdraft and credit card, yet the £160 per year repayments hinder my budget control.

The information from you both, that it will not happen if the Tories don't win in May and then not until 2016, makes it all academic anyway. But thanks again for the replies.