Cash in small pension to pay off debt?

[SomeonesSunshine]

I’m 35 years old and only had a pension for a few years. I estimate that there’s approximately £3000, that I’ve contributed. I have a loan for £2700 which costs me £347 per month. It’s due to be paid off in April, but money is very tight. Should I cash in my pension to clear the debt?

I don’t think you can do this until you’re 55? Might be wrong though.

Ah! Well that may make the decision for me then!

Hello SomeonesSunshine
At present the age you have to be to cash in a private pension is 55. In 2027 this will rise to age 57.
Have you considered refinancing the debt over a long period to lower the monthly amount you pay?

I’ll look in to that. Part of me just wants it over and done with. It’s tight but doable. It was over 2 years, when I took out the loan so the end is in sight-ish

Your future self will be pleased you weren’t allowed to cash in your pension! If you have £3000, even if you could access it you’d get taxed on the withdrawal anyway!

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I'm not sure who your pension is with and they could all work differently, but I know that the NHS pension allows you to withdraw funds if you've been paying into it less than 2 years. But as someone else has said, you'd get taxed on the amount as well. You'd be better leaving your pension money alone if you can x

There are unscrupulous companies that will cash it for you before she 55 but they will take a huge chunk of it and you'll most likely end up with a hefty tax bill to boot so you'll end up with barely anything. Really really don't do it even if a company tells you they can. That 3,000 will be worth a lot more by the time you're retirement age,a

So as pp says if your length of service during the pension was less than two years you might be entitled to a refund of contributions. This would only be yours and might not be worth your while.

Even if a company comes along the pension provider won't let you encash unless your 55 or meet certain criteria eg retirement on ill health, occupation that allows early retirement etc.

Look at debt consolidation that might help.

Get a 0% money transfer to pay off debt over a longer period of term to reduce monthley payments. There will be a transfer fee tho. Check moneysavingexpert for offers.