Paying debts with pension

After having severe mental health issues this year with a drop in wages due to dropping to half pay, i find myself unable to cope with my debts.   I want to get some of my pension out, pay my debts and then pay extra into my pension to make up for this.   It causing severe anxiety and i am actually struggling to cope.   One of the debts is with Very and i cant access their emails as there is a secure password which involve part of my phone number which changed and they know this!!!   The advisor wasnt very nice when i called last and i am getting very ill again with the thought of dealing with them.   There is no email address available.   
Is it a better idea to pay off with pension as the thought of all the debt is driving my mental health down. I just need peace of mind 

Comments

  • Brie
    Brie Posts: 9,281
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    The first question that springs to mind is can you access your pension?  If you are under 55 then very likely the answer will be no.  

    The second question then becomes if you are over 55 should you be accessing your pension?  If you do what will you live on when you stop working completely?

    My suggestion would be for you to seek assistance with your debts.  Also if you are unable to work full time due to health issues (mental or physical) are their any benefits that you could apply for to give your income a boost?  

    Citizen's advice should be able to help you on both sides of this but other organisations may be able to assist as well.  StepChange, NationalDebtline & CMA are the obvious ones for debt.  They likely will be able to contact your creditors on your behalf so you don't need to be talking to obstructive, not nice people.  

    You could also submit a statement of accounts here for some advice on budgeting.  Check on the stickies on this forum and just follow the instructions.  
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • I would be very wary about cashing in any pension. Depending on your age, there well may be severe tax implications. IMO you need professional advice.
  • molerat
    molerat Posts: 31,553
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    If you post a full SOA then someone will come along with some tailored ideas.
    Paying off debt with the pension when you could possibly afford to pay some money towards the debt, you said you could pay more into the pension so why not put that towards the debt instead, is robbing your future self.
    You could write to Very, Resolver have contact information https://www.resolver.co.uk/companies/very-co-uk-complaints/contact-details

  • fatbelly
    fatbelly Posts: 20,228
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    Given your mental health problems, I think you should be open with them about that.

    Very are the least priority on nonpriority debts so you definitely should not be affecting your pension.

    Have a read of this

    https://www.nationaldebtline.org/fact-sheet-library/debt-and-mental-health-ew/
  • gwynlas
    gwynlas Posts: 1,622
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    Do not use any of your pension to pay off debt this will be needed to live on when you retire. The debts might be causing you a high level of anxiety but the good people on this forum will advise what to do to bring them undeer control. You are not he first as a lot of us have been in this position and have come out the other side. Just keep writing on the forum and follow advice given if appropriate. There are charities who can helo with debt management but do not sign up with anyone until you have checked back here first. Things will get better but everything takes time.
  • sparks_2023
    sparks_2023 Posts: 161
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    edited 26 December 2023 at 5:30PM
    It's almost certain that you'll need to be 55 to access your pension funds. Then you need to look at how much you want to withdraw and how much is in the pension pot. A withdrawal of over 25% of the fund will be taxed ( and you will activate MPAA which restricts how much you can then pay back into any pension without further tax. Once MPAA is triggered you are stuck with it forever - there is no way to "un-trigger" it. )

    Think hard. If your pension pot is very large then withdrawing a tiny amount might on balance be OK. If your pension pot is small then a large withdrawal is a lot less wise.

    And think SCAM. Anyone on the internet who reckons they have a "clever" (ie illegal) way to access your pension fund before 55 ( if you are younger ) will be a smooth talking crook whose aim will be to "take everything" except the hefty tax bill HMRC will pursue.
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  • sourcrates
    sourcrates Posts: 28,534
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    Very will quite quickly move your account to their internal debt collection arm who I think are still NDR ltd.

    Unfortunately they are as difficult to deal with as Very are, and are not helpful at all.

    It may sound silly to ignore your creditor, and it will negatively affect your credit history, but the best way to deal with them is to wait until they either assign the debt to an external debt collector, or they sell it to a 3rd party.

    These companies, outside of the shop direct group, tend to be much easier to deal with, and will accept whatever payment arrangement you may care to propose, normally without question.

    Its likely a better option to have a default on file, rather than squander hard earned pension money on a non priority catalogue debt.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Kat78MFW
    Kat78MFW Posts: 258
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    This sounds really tough for you but there is help available to protect your mental health. You are likely to be eligible for breathing space 
    https://www.nationaldebtline.org/fact-sheet-library/breathing-space-ew/
    You can ring national debt line on 0808 808 4000 and they will be able to help you. They will help you find a solution without you having to speak to Very. 
    Keep posting here for support as well. 
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  • Just tell your creditors you cannot afford to pay them and they have to give you breathing space. No I most definitely would not cash in your pension and you may not be able to anyway. How old are you?

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  • I am taking a slightly different stance, if you are over 55 and the debt is relatively small, a couple of thousand pounds, and your pension fund is strong then I would consider doing this, how much is the debt and how much do you have in your pension? 
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