PensionBusiness - Pension News, December 2011
Clearing your debt via a pension
People can often find themselves in a situation of having uncomfortable levels of debt at the same time as having significant pension funds.
Pension Release
If you are aged 55 or over there may be an opportunity for you to take 25% of your pension fund in cash, leaving the rest invested for your retirement.
The 25% taken from the fund is paid 100% tax free.
This option is particularly attractive if you currently have significant debts, with high interest rates.
It is important to remember that this decision needs careful consideration as it will reduce the level of your pension income in retirement.
Pension Loans
There are currently several providers offering Pension Loans. Pension Loans often offer cash up to 50% of the fund value. These schemes are significantly higher risk than the standard position, meaning that your entire pension fund can be lost.
These schemes are not regulated by the Financial Services Authority, and are not HMRC approved. For this reason PensionBusiness Pension Experts do not recommend these schemes.