PFRDA

What's wrong with taking a lump sum from my pension fund while I am still young?

I plan to this later this year but previous "advice" generated negative responses. I have a mountain of debt that I have no other way of clearing and not being able to contribute to the household expenses is putting a serious strain on my marriage. TO STEVEN F - We have separate finances by mutual agreement and my husbands initial suggestion. He earns my money than me and pays for everying. My personal debt prevents me from doing so. You obviously didn't read my posting properly. TO BUD - I am 50 this year.

Public Comments

1. can you barrow against the pension - for consolidation.
2. You are speaking to someone who did just that and now looking back on it - it was the DUMBEST thing I've ever done. I paid off things that could have waited even though at the time I thought they couldn't. And guess what I'm still in debt despite my hard effort. However, if you do this please ONLY do it if you are 200% sure that you will pay off ALL your debt and that it's worth it to you. Because money problems WILL kill a marriage. So in that sense, it may be worth it. Your only other options (which are tough decisions) are bankruptcy or a pt job and pay it off slowly. Those suck but at least you would still have money to enjoy retirement. The worst that could happend is that you pay what you can, when you can or you'll lose some things. Nobody wants to let go of possessions but its better than losing yourself in the process of money problems. And it is SOOO easy to do, trust me. Good luck and God Bless.
3. I tried to get some of my pension and they said I could only get some of it when I`m 50, 15 years before it has matured
4. Pension funds grow in a virtually tax free environment (assuming you are from the UK). The earlier years of buildinng it up are your most valuable. For every five years that you delay starting or defer your pension you need to double the amount that you save to catch up. When you do need your pension (when you retire) the purchasing power of it will be lower than it was a few years ago as people are living longer so annuities (the pension payment) are lower. If you strip out your pension fund now you will have less to buy an annuity and really have to scrimp by. It may be the right thing for you to do as if your debts are crippling you now and you cannot afford to live it is all a bit daft worrying about what will happen when you retire. Make sure it is the last resort if you do it and quickly start to pay into a pension again to build your retiremet fund back up
5. Taking a lump some from you pension fund is the single WORST method o paying of debt. You WILL lose nearly 1/2 of the withdraw to penalties and taxes. You WILL cut off the tax deferred earnings you would have received. Replacing those earnings is likely to require saving DOUBLE the amount you take out. Your question appears to imply you and your spouse maintain separate finances. I submit your DEBT is not the source of the strain. Keeping your finances separate is a SYMPTOM of a PRE-EXISTING issue.
6. Do not do it. You will never replace that money and have nothing for retirement. Better to get a second job and pay down that debt.
7. In principle, a pension should be there to provide you with an income in retirement; take the money now and you’ll have less to live on in retirement. If you are like most people in this country, then you’ll probably not have enough in your pension fund as it is. Your pension fund grows over time, so 25% of your fund now, will be worth less than 25% of your fund later. BUT, if you are up the creek without a paddle, then do what you need to do to get yourself home again; discuss the plans with your spouse, and try to agree between you what you can do to rebuild your finances and your pension fund after you have got yourself back on an even keel. Disclaimer: The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances. To find and IFA please call 0800 085 3250 or go to http://www.unbiased.co.uk.