Pension Release
Case Study

Pay off your credit card with your pension

If, like many people, you are building up credit card debts, then the good news is that you may be able to pay them off by releasing money from your pension early.

You can do this from age 55 with almost any UK Pension you are not already receiving.

Example of how you could be better off using your pension to pay off credit cards

  • Steve from Birmingham is aged 56 and has credit card debts of £12,500.
  • He pays this off at £232 per month. At this level it will take 10 years to pay off.
  • It would take 10 years to clear and he would pay back a total of £28,072.

Here’s how he could use his pension to be better off (Assuming a pension pot worth £50,000)

  • Release 25% Tax Free Cash from the pension, this gives Steve the £12,500 to pay off all his debts, making him debt free and with £232 extra each month in his pocket.
  • Steve then pays the same £232 into his pension over the next 10 years. The government will increase this by a further £46.40 every month.

Pension Value after 10 years if Steve hadn’t used his pension to pay off his debts: £57,600

Pension Value after 10 years if Steve releases £12,500 Tax Free Cash now and pays back his £232 pm: £66,900

Steve is better off by £9,300 instead of paying interest.

This is a very simple scenario to show how it works, everyone’s circumstances are different. At Grove we offer a free consultation service to see if this would work for you.

Assumptions:

Interest rate on credit card = 18.9% APR (Barclaycard typical advertised rate Maintain Credit Card source: thisismoney.co.uk December 2018)

Pension fund remains invested for 10 years and grows by 5% a year adjusted for inflation illustration provided by Royal London and AXA. The growth rate could be more or less than this.

Basic Rate Tax Relief applied to the pension contribution, which could change in the future.

Once Tax Free cash has been taken, the remaining fund, when released, will be taxed at your marginal rate depending on your circumstances at the time and could change in the future.

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I have already recommended your services to some of my colleagues. I was highly delighted with all aspects of the services I received. Thank you for a painless, understandable transaction.

Mr GWB, Driffield

I thought the process of pension release would be difficult but was made easy to understand by the very helpful staff at Grove.

Mrs KS, Runcorn

I found your service first class with friendly polite staff. All questions I had were answered. It was nice to be with a company that did not hard sell. Most refreshing.

Mrs JC, Warwickshire

I found the service very good, everything was explained in simple English, which made it easy to understand. The advisor was polite and very helpful.

Mrs SB, Selby

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

Thoroughly recommended, nothing to much trouble, always there to give advice, always dealt with the same person at all times. Very glad that I used this company.

Mrs JA, Queenborough

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

A very clear, understandable and efficient service. All staff were friendly and knowledgeable.

Mr RP, Sheffield

I did not think such a good service existed but it does. Grove customer service really does look after the customer.

Mr RW, Bedford

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