My journey to a debt free life

Onebrokelady

Cherryfudge said:

Pensions are definitely confusing, I hope you get someone who can give know the best advice. Good that you will have help with housing costs, but be careful that a lump sum payment doesn't jeopardise that, or that you don't lose too much in the long term by taking part of your pension early.

That's the other reason I'm not sure about doing it. I'm going to wait for now and get some advice . I don't want to do it if I can actually afford not to 😊

Onebrokelady

enthusiasticsaver said:

I would exercise extreme caution on taking part of your pension firstly because presumably it is an NHS pension which is a DB pension and not a DC so not what you would call a flexible pension with freedom to take part of it early. Presumably you are still paying into it so you cannot crystallize it anyway. 

 Pension wise are good but they only advise on defined contribution (DC) pensions.  The NHS pension is supposedly a very good one and is defined benefit (DB).  

 I would definitely find out what benefits you are due though. 

This is what worries me. It is an NHS pension and I'm allowed to take it now if I want to but I don't understand the consequences of doing that. I wanted to take half of the lump sum and keep in paying into it until I decide to retire but I do t know if I can or if that would affect my pension negatively

badmemory

Obviously I am no expert but I think --- Please be careful about claiming any pension before state pension age.  They cannot require you to take it to avoid benefits but once you do that is it.

Onebrokelady

Just updated my signature because my payment to S C went out today so I'm now under the £12,000 mark. I'm hoping to restart my payments as soon as possible 🤞🤞I've got rid of my emergency fund,house fund and Christmas savings from my signature because there simply isn't any money for any of it at the moment. My biggest bill each month at this time is my energy bill 😟

SusieT

It may be worth popping a question on the pensions board re taking part of the pension early, they have some very knowlegable people there who may give you some pointers.

Onebrokelady

SusieT said:

It may be worth popping a question on the pensions board re taking part of the pension early, they have some very knowlegable people there who may give you some pointers.

Thanks I will have a look 

enthusiasticsaver

It might depend on which scheme you belong to.  I think there is a 1995 scheme and the more recent 2015 one and they both are treated differently so check on that first. If you are retiring (or drawing on your pension) earlier than your normal retirement date it will be actuarially reduced for each year early you are taking it.  If (and it is a big if) you are allowed to take any part of the lump sum prior to your NRD I assume that will be tax free as it will be part of the 25% you are allowed to take. A big problem may be though that I think to crystallize your pension you need a break in service and any pension contributions you make after taking the pension will be treated as a new employment which will be massively detrimental to you. I would use that as a very  last resort. 

milann

I’m another who would be very wary of taking any pension early. Look into it carefully before you do anything. I’d be tempted to go down the UC first as it seems to be the benefit that entitles other rebates on things. If you take some of the lump sum it could well effect the decision. Im sure Citizens Advice will put you right.

amber03

I used to work in a pensions department but hated it, couldn’t get my head around all the information. Thankfully my DH is a trustee of his works pension board, so any info I get now regarding pensions I just hand to him. I knew he would come in handy one day.xx

Onebrokelady

enthusiasticsaver said:

It might depend on which scheme you belong to.  I think there is a 1995 scheme and the more recent 2015 one and they both are treated differently so check on that first. If you are retiring (or drawing on your pension) earlier than your normal retirement date it will be actuarially reduced for each year early you are taking it.  If (and it is a big if) you are allowed to take any part of the lump sum prior to your NRD I assume that will be tax free as it will be part of the 25% you are allowed to take. A big problem may be though that I think to crystallize your pension you need a break in service and any pension contributions you make after taking the pension will be treated as a new employment which will be massively detrimental to you. I would use that as a very  last resort. 

Thanks for the info 😊 I'm in the 1995 and 2015 scheme. I am allowed to take my 1995 pension now but don't want to. I just had a mad idea that I could pay the last bit of my mortgage off with some of my lump sum. I'm have to leave my employment for 24 hours if I want  to take my pension and would then rejoin the 2015 scheme. I'm not going to do it now as it seems to be a bad idea all round