can I get a loan against my pension

john1709

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. My credit rating is poor so I can not get a loan any other way. I am still working for the same company and I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

AnotherJoe

Two points.

1. If its a final salary pension you don't have £340k in a pot.

2. To be harsh, if you have a poor credit rating and cant easily get a loan what on earth are you doing even considering one to fund a big party? Because a wedding costs maybe £200. The party, sure sky's the limit.

I would like to think your daughter would be be horrified to know you were contemplating damaging your retirement and your financial rating for a big party. And if she doesn't care about that, well she doesn't deserve one.

Marcon

john1709 said:

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. My credit rating is poor so I can not get a loan any other way. I am still working for the same company and I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

No and for goodness sake don't even try. The technical term for what you want to do is 'alienation' - and normally simply attempting to pledge your pension in this way could mean you lose your right to it altogether. Harsh but true. 

Dox

You can't use your pension as security for a loan. There will be a clause in the trust deed prohibiting a member from doing so, or even attempting to do so - that's a requirement for the trust to get tax approval, so would be rigorously enforced by the trustees in order to protect the whole trust.

Only 15 people are allowed to attend a wedding under the current restrictions, so it really doesn't need to cost much to be a truly memorable and enjoyable day.

dunstonh

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot

A final salary scheme does not have a pot.

 I tried to take out a lump sum tax free 25% but due to the pension type I could not.

That is because there is no pot for a 25% to be applied to it.

is there any way I can borrow against my pension.

The pension is not an asset that belongs to you. 

I am still working for the same company and I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

It is all very well wanting to pay for your daughters wedding but you should also be realistic.   

You are already in debt whilst you are working.  Now you want to "mortgage" your retirement.  How do you propose repaying it when you are earning less?     Your daughter isn't going to think any less of you because you cannot afford to pay more.

Removing any emotion from the situation, you are "financially" lucky that weddings have never been cheaper due to the coronavirus.   

ElephantBoy57

john1709 said:

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

Does any type of pension allow you to take 25% out whilst still leaving the pension active?

dunstonh

ElephantBoy57 said:

john1709 said:

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

Does any type of pension allow you to take 25% out whilst still leaving the pension active?

If you are in a defined contribution scheme and over 55 then yes.

Marcon

dunstonh said:

ElephantBoy57 said:

john1709 said:

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

Does any type of pension allow you to take 25% out whilst still leaving the pension active?

If you are in a defined contribution scheme and over 55 then yes.

But only if the terms of the scheme allow you to do so. A trust-based occupational DC scheme generally doesn't permit that, and some older-style personal pension contracts don't either.

ffacoffipawb

Marcon said:

dunstonh said:

ElephantBoy57 said:

john1709 said:

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

Does any type of pension allow you to take 25% out whilst still leaving the pension active?

If you are in a defined contribution scheme and over 55 then yes.

But only if the terms of the scheme allow you to do so. A trust-based occupational DC scheme generally doesn't permit that, and some older-style personal pension contracts don't either.

Most modern schemes that are auto-enrolment friendly do allow this.

dunstonh

Marcon said:

dunstonh said:

ElephantBoy57 said:

john1709 said:

I have recently turned 55 and have a final salary pension that at the moment has 340,000 in the pot I tried to take out a lump sum tax free 25% but due to the pension type I could not. is there any way I can borrow against my pension. I do not want to leave the current pension plan as it final salary, but I would like to clear some debt now and pay for my daughters wedding.

Does any type of pension allow you to take 25% out whilst still leaving the pension active?

If you are in a defined contribution scheme and over 55 then yes.

But only if the terms of the scheme allow you to do so. A trust-based occupational DC scheme generally doesn't permit that, and some older-style personal pension contracts don't either.

That is not a blocker.  You just transfer for them to one that does.  (caveat on the hybrid style plans that make up a very small number of cases overall.   Or plans with safeguarded benefits where doing such a thing would be daft - albeit style possible).

Tealblue

dunstonh said:

If you are in a defined contribution scheme and over 55 then yes.

Agree you can usually transfer - but this statement taken on its own is, as already pointed out, misleading. There are loads of people on this board who would read it and take it to mean the whole universe of DC schemes, including the one they took out in 1989, and badger the poor old pension provider accordingly.