anyone know about LGPS? should I stop paying into pension to pay debt?

[pensionquestion]

Through a combination of various factors (divorce and other things) I find myself in a significant amount of debt.

I am now considering whether or not to stop paying into my pension to further pay it down.

I have approximately £18,000 on credit cards. About £7,500 on a 0% card which expires June this year, £7,500 on a 0% card until October next year and £3,000 which I'm paying interest on.

All of my bills and spending money (for food etc and modest social life, hobbies etc) except paying debt comes to approx £2,500 per month. I currently take home around £3,000 per month.

My pension comes out of my gross pay at approximately £380 per month. It's a average salary local government pension so my employer pays in.

is it worth it to stop paying into my pension to pay down debt?

How do I work out the impact on my take home pay? Is this a mistake long term? Grateful for any opinions, thank you.

When I looked into opting out of my civil service pension, I found out that I would only be about £30 a month better off - due to 'contracting out' you pay less tax, so if you stop paying into the pension, you won't be £380 a month better off, as you'll end up paying more tax. Contracting out ended this month, so I have no idea of the affect.

I used one of those tax calculators online and I input my salary details and it worked it out for me. A Google search should bring one up. You can input your details both with and without pension contributions.

Depends on your age aswell.
Generally it is better to stay in due to the amount that your employer will be contributing to your pension pot.

The LGPS brought out a 50/50 option recently, pay half in and receive half the benefits. I only glanced at it in the magazine but it might be worth looking into if you're struggling.

Do you have a house you can release equity in? Remortgage and pay off all debts?

I'd find some other way, it does depend on your age. You'd be hard pushed to get the same benefits any other way.

Thanks for your responses.

I'm 36 and rent so sadly can't remortgage or release equity

Keep paying your pension you will be fit later far more than you will save now.
£2.5k seems excessive for monthly outgoing though. Could you post a breakdown and posters can help you save money that way.
" hobbies" shouldn't really be on the cards when you are £18k in debt.

Benefit! Not be fit

Leave the pension alone. Try and cut back a bit more. But you can repay your debt at £500 a month. If you can juggle interest free periods you'll be debt free in three years. Less if you can make some cutbacks, eBay stuff etc.

The reduced contracted out rate of NI has gone from start of this tax year so you will be paying extra NI - about £40 on a salary of £42k. Are your contributions really that high a month? I take home £2.5k and my LGPS contributions are 6.5% of salary.

Look at 50:50 scheme but I think you should stay in if you can. The current scheme still gives really good benefits.

Sorry that should say extra NI of £40 a month

Thanks for your thoughts on this

I am now wondering whether I am better consolidating my credit card debts into a loan and paying that off, over say four years? Would that be sensible? Interest rates are so low and I wonder if that would be better than swapping cards and paying the associated fees all the time

Also I should bear in mind that I may be lucky enough to come into a sizeable chunk of cash early next year. The intention for this would be to put a deposit on a house. So I need to consider how my mortgage affordability will be impacted by my debts.

If I pay circa £350 a month on debts I should be able to get enough of a mortgage to buy what I need (I could of course overpay the loan until I get the mortgage?)

Moneysavingexpert.com is a really good website with lots of good information on debt consolidation and how to manage payments. (Don't leave the scheme!).

I'd leave the pension. Are the credit cards 0%? If not, can you get at least some of the debt transferred to a 0% card?