Dipping into pension pot to pay off credit card debt.

xylophone

Do you propose taking only the 25% Pension Commencement Lump Sum from the 1987 pension?

Will you need to move this pension to an arrangement which will permit you to take the lump sum and leave the balance invested?

underboyleheating

xylophone wrote: »

Do you propose taking only the 25% Pension Commencement Lump Sum from the 1987 pension?

Will you need to move this pension to an arrangement which will permit you to take the lump sum and leave the balance invested?

I wouldn’t need 25% as I only require 5k from the 1987 pension. I assume the rest of the pension would remain as is.

Malthusian

Does the 1987 pension (or any of the others) have any safeguarded rights?

underboyleheating wrote: »

I’m posting here to judge whether or not this is a good or bad idea. Or is there another option?

What about the option Willing2Learn suggested in post #11?

xylophone

Have you checked whether or not there are safeguarded benefits with a value greater than £30,000?

I wouldn’t need 25% as I only require 5k from the 1987 pension. I assume the rest of the pension would remain as is.

It may not be possible to do this within the existing arrangement.

You may have to transfer to another pension provider.

underboyleheating

Malthusian wrote: »

Does the 1987 pension (or any of the others) have any safeguarded rights?

What about the option Willing2Learn suggested in post #11?

I’m pushed to pay the existing minimum payment of £120 per month, so any increase no matter how small would be a struggle. Hence why I thought the 5k pension dip would maybe be a viable option. I’m self employed, so getting approval for a 0% interest card may also be difficult. Also, once the card was cleared I would only use it sparingly and pay off the balance every month.

xylophone wrote: »

Have you checked whether or not there are safeguarded benefits with a value greater than £30,000?

It may not be possible to do this within the existing arrangement.

You may have to transfer to another pension provider.

When I had my pension review my provider indicated that if required he could arrange for money to be taken from my pension pot. He never mentioned anything about any issues in doing that.

Sorry for my ignorance, what do you mean by safeguarded benefits?

xylophone

Sorry for my ignorance, what do you mean by safeguarded benefits?

https://www.reassure.co.uk/pensions/safeguarded-benefits/

https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement

wjr4

underboyleheating wrote: »

I’m pushed to pay the existing minimum payment of £120 per month, so any increase no matter how small would be a struggle. Hence why I thought the 5k pension dip would maybe be a viable option. I’m self employed, so getting approval for a 0% interest card may also be difficult. Also, once the card was cleared I would only use it sparingly and pay off the balance every month.


When I had my pension review my provider indicated that if required he could arrange for money to be taken from my pension pot. He never mentioned anything about any issues in doing that.

Sorry for my ignorance, what do you mean by safeguarded benefits?

This is what I asked previously - any guaranteed annuity rates, guaranteed minimum pension, higher than 25% tax-free cash. Are they personal pensions or Section 32, Executive Pension, there's so many different types so it is best you see an IFA to decide.

underboyleheating

Okay a quick update...

I have been advised that it would be in my best interests to merge my Royal London Pension with my much larger Prudential Pension. The money I require would be roughly 25% of my existing Royal London pot (currently around 25k). The two would then be merged into something called a ‘Flexible Draw Down Pension’ and the 5k would be taken from that (there is a fee involved for doing this, typically 3%). I would then continue to pay the same monthly amounts that I currently do to Royal London, only this would now be to the Prudential instead. I have been advised to leave my much smaller Standard Life former works pension as is.

I’m now going to arrange a meeting with the Prudential to see what’s involved.

Does this sound reasonable?

lisyloo

Who has given you this advice please?
Is it the prudential? or someone independent like an IFA?

wjr4

Please go and see an IFA and not a salesperson from Prudential - they are not independent - of course they want your money. IFAs are unbiased and will tell you what is in your best interests rather than just how much money they can make from you. Well, that's what I would do anyway!