Dear TPAS
I have some debts I need to pay off - I've got about
£16,000 in a couple of pensions I took out which would pay
this off and leave me a bit left over.
Can I cash these in? I took one out with my first job that's with
Norwich union, the other one I took out myself. I'm 33 by the
way.
Answer
A pension plan is meant to be a long-term investment, to put
money by for you when you retire. Also, you get the valuable
benefit of tax relief on the money you pay in to a pension plan.
Because of that, pension plans come with rules and restrictions -
one of those is that you cannot draw on your money before a certain
age. That is currently 55.
So, because you are only in your thirties, your pension companies
won't let you draw any money from these two plans now. If you need
advice on how to pay off your debts, we would suggest you contact
National Debtline (on 0808 808 4000) or the Citizens Advice Bureau
(www.adviceguide.org.uk).
"Cashing in" a pension plan - taking the whole 'pot' of money out
as a lump sum - comes with even more restrictions. First of all,
you have to wait till you are 60. Second, the total of all private
pension savings you have must be less than a certain limit
(currently that's £18,000). Third, if you have more than one
plan and want to cash them all in, you must do it within a 12 month
period.
You can call our helpline on 0845 601 2923 if you would like to discuss any of the issues related here.
