Can I cash in my
pension to pay off debt?

We have the answers

Using your pension to pay off debt

If you are aged 55+ and have a personal or company pension you are not currently paying into or receiving, you can cash in 100% of your pension as a lump sum. 25% would be tax free and the balance is taxed at your marginal rate.

How to clear your debts using cash released from your pension.

The Pension Freedom rules introduced in 2015 now allows people to access their pension funds early and use the cash to pay off debts, especially if the cost of servicing the debts is spirally out of control. There are many reasons why people find themselves in debt, such as ill health, redundancy, bankruptcy or even divorce.

You can use your pension to pay off ANY debts if:

  1. You are age 55+.
  2. You have a Personal Pension or Company Pension you are no longer paying into or taking.
  3. You can be employed and continue to work.

Type of Pensions you can cash in to clear your debts:

  1. Defined Contribution Pensions – Company, Personal, Stakeholder and Group Personal Pension.
  2. Defined Benefit Schemes – Private Sector and Funded Public Sector Final Salary Pensions.
  3. Funded Local Government Pension Schemes (LGPS).

Does not apply to the State Old Age Pension

What are your options?

There are several options available to you:

  1. You can take a 100% cash lump sum – the first 25% is tax free. The rest is taxed at your marginal tax rate applicable at the time you take it, which could change in the future.
  2. Transfer your fund to a UK approved pension contract that gives you control over your money. You can then access your money when you need it, similar to using a bank savings account.
  3. Leave the rest invested in a trusted scheme to provide cash for another time.
  4. Transfer your pension to a scheme that will allow you to pass 100% of your fund to your beneficiaries in the event of your death. Death Benefits are paid free of tax if you die before 75; death after 75 is taxed at the beneficiary’s marginal rate

Warning

This service only applies to pensions in the UK. Transferring away from a defined benefit pension scheme means you will lose valuable guarantees.

Taking benefits early will almost certainly reduce your pension income in retirement and is only suitable for a limited number of people and circumstances. This should not be seen as an easy option for raising cash.

If you release all your money from your pension early you will not have anything left to provide you with income in retirement.

IT’S TIME TO TAKE CONTROL OF YOUR PENSION

know your options

If you would like to know your options we can provide a free no obligation consultation. As part of this we will look at:

  • What existing pension plans you have in place.
  • Whether you have the right type of pension to transfer.
  • What your plans are for retirement.
  • How much cash you can release.
  • Your taxation position.

Our initial free consultation will tell you if transferring your pension is not suitable.

In order to establish if transferring your pension is fully suitable for you, we will need to carry out further analysis, which means you agreeing to progress to full advice, for which there is a charge.

Which option is best for you depends on your circumstances, and what’s important to you. Everyone’s circumstances are different.

We guarantee that we will present you with a clear set of recommendations in plain English, only advising you to transfer your pension if we believe it’s in your best interest.

Furthermore, we will not hassle you with lots of calls and will only act on your behalf when you provide us with signed written confirmation.

IT’S TIME TO TAKE CONTROL OF YOUR PENSION

Know your options

Know your options

If you would like to know your options we can provide a free no obligation consultation. As part of this we will look at:

  • What existing pension plans you have in place.
  • Whether you have the right type of pension to transfer.
  • What your plans are for retirement.
  • How much cash you can release.
  • Your taxation position.

Our initial free consultation will tell you if transferring your pension is not suitable.

In order to establish if transferring your pension is fully suitable for you, we will need to carry out further analysis, which means you agreeing to progress to full advice, for which there is a charge.

Which option is best for you depends on your circumstances, and what’s important to you. Everyone’s circumstances are different.

We guarantee that we will present you with a clear set of recommendations in plain English, only advising you to transfer your pension if we believe it’s in your best interest.

Furthermore, we will not hassle you with lots of calls and will only act on your behalf when you provide us with signed written confirmation.

NO OBLIGATION

FREE INITIAL CONSULTATION

Get started today and receive your free Pension information pack

Receive expert advice from Grove Pension Solution for free. It’s only if you decide to proceed to full advice that a fee will be charged.

CASE STUDY

Paying off debts with your pension

Here we take a look at an example of how funds acquired through Pension Release can be used to clear existing debts and plan for those unforeseeable emergencies that can and do crop up.

When Tom first looked into releasing some money from his pension, he was bankrupt, having had his catering business fail due to circumstances out of his control, and still left with an outstanding loan that hadn’t been covered in the bankruptcy. Between his wife and himself, Tom calculated that the couple’s total debts amounted to £9,400. Their wish was to pay off the debts then acquire more funds to put towards an emergency fund.

Tom initially looked into pension release as he thought that the three personal pension plans were too insignificant to provide a sufficient income in retirement, so he figured he could “cash up” and use the funds to assist in getting the couple’s life back on track. Tom considered the sacrifice of the pension funds to be a small inconvenience compared to the stress that the couple were going through at the time as they were unable to live within their means.

Our Advice

Grove Pension Solution’s advice in this situation was to transfer his three pensions into one plan, and as a result, a total cash amount of £13,365 was released. As income was not required, the remaining balance of the pension fund would be left invested to a later date.

The released funds provided Tom with enough money to clear the £9,400 debts he and his wife had accrued and still have money left over for their planned emergency fund.

Had Tom’s circumstances been a little different pension release may not have been suitable. For example, had he not been a bankrupt he may have been able to restructure his debts into one larger amount over a longer period, this would have achieved reducing the monthly cost of his debts, which in turn meant he could live within his means and therefore not require to unlock his pension. Or had his pensions been a company pension scheme the loss of what he would have otherwise got at retirement might have been too much to justify taking some cash out of his pension early.

CASE STUDY

Paying off debts with your pension

About Grove

Here we take a look at an example of how funds acquired through Pension Release can be used to clear existing debts and plan for those unforeseeable emergencies that can and do crop up.

When Tom first looked into releasing some money from his pension, he was bankrupt, having had his catering business fail due to circumstances out of his control, and still left with an outstanding loan that hadn’t been covered in the bankruptcy. Between his wife and himself, Tom calculated that the couple’s total debts amounted to £9,400. Their wish was to pay off the debts then acquire more funds to put towards an emergency fund.

Tom initially looked into pension release as he thought that the three personal pension plans were too insignificant to provide a sufficient income in retirement, so he figured he could “cash up” and use the funds to assist in getting the couple’s life back on track. Tom considered the sacrifice of the pension funds to be a small inconvenience compared to the stress that the couple were going through at the time as they were unable to live within their means.

Our Advice

Grove Pension Solution’s advice in this situation was to transfer his three pensions into one plan, and as a result, a total cash amount of £13,365 was released. As income was not required, the remaining balance of the pension fund would be left invested to a later date.

The released funds provided Tom with enough money to clear the £9,400 debts he and his wife had accrued and still have money left over for their planned emergency fund.

Had Tom’s circumstances been a little different pension release may not have been suitable. For example, had he not been a bankrupt he may have been able to restructure his debts into one larger amount over a longer period, this would have achieved reducing the monthly cost of his debts, which in turn meant he could live within his means and therefore not require to unlock his pension. Or had his pensions been a company pension scheme the loss of what he would have otherwise got at retirement might have been too much to justify taking some cash out of his pension early.

Testimonials

from the point of initial contact right the way through to what was an extremely painless and satisfactory final outcome I was treated with courtesy, politeness and kept informed of every stage. My requests for any further clarification are treated with great patience and understanding.

Mrs HB, Newcastle Upon Tyne

The whole experience was comprehensive and informative. I was never put under pressure, and the whole procedure was conducted professional, with feedback. Everything that I was told would be done was done in the time frame that I was advised of.

Mr MD, Plymouth

The advice I received was excellent. Each time I didn’t understand something I made a phone call. I was never felt to feel like a nuisance (which I know I was!) and everything was simply explained to me. Thank you – what a wonderful team!

Mrs UA, Wigan

I looked around the internet for some time, all I looked at was very confusing to me. I then found Grove Financial and found it very easy to read and take in. I sent an email with a question to see the response. I had a perfect response in plain english. I was very happy to carry on with the excellent personal service.

Mr JB, Bristol

The advisor explained everything and took time to make sure I understood what he had said. Service provided prompt information clear and easy to understand. Staff polite at all times. Everything they said would happen did in time frame told.

Mrs LL, London

After wasting so much time on sites belonging to “big players “. I selected an unfamiliar one belonging to Grove Financial and never looked back – excellent service and commitment.

Mr TJ, Surrey

I had no pre-knowledge of what would be involved in pension release so I was pleased by the professionalism and friendly service offered by your organisation, things were explained in a clear and concise way so I would have no hesitation in recommending your services to other people.

Mr KH, Sunderland

Your staff were very helpful from the start and very professional in their approach to what is a complex field. I would recommend your services to anybody.

Mr AS, Oxford

I wanted to release some of my pension money ( tax free ). Grove Financial were extremely helpful in every way from start to finish. No problems were encountered throughout. I Would strongly recommend them, many thanks.

Mr DS, Swindon