Should I use pension drawdown to clear debt and mortgage?

[ihatesonic]

I've tried to give as much detail as possible so it's long but looking for options.

I am a single parent to 2 adult children. Both have disabilities and live with me. I earn approx £35K, they are both on UC and PIP. One cannot work and gets the health allowance, one can work but cannot find a job (autistic). Both pay me £250 pcm, one pays for her carer in addition, the other pays for a gardener. I am carer for both.

One daughter has become physically disabled and I have had to have adaptation to the house and purchase items which have left me with approx £15k of debt.

I have 4 pension pots - one is £30K, one £40K, one £160K and a works one that will give me an income of around £15k a year. I also contribute AVC of £100pm.

Basically I struggling month to month to pay all the bills and keep up with the debt payments.

I was considering taking a lump sum draw down from the £160K pot of £30k to clear the debt, pay off £10K of the mortgage and finish the renovations needed but not sure if is the best idea.

oh and currently 58y and able to work in my job until retirement.

Anyone have any ideas? what are the drawbacks?

There is a rule which restricts further contributions to a pension if you drawdown too much. Sorry I don't know the detail. You can get free government funded pension advice https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

Also consider that money taken from your pension will be taxed. As you're already earning £35k, that money will be taxed at 20 and 40%, less the 25% tax free element. You're also withdrawing that money so it won't be available to grow in the future.

I know MN doesn't like this as a suggestion, but I would look at what money your children have and consider borrowing money from them if they have significant savings. Also consider whether the £250 you take from them is sufficient to cover household costs, their food, clothing, phones, any other costs.

Unless their income is very minimal, £250 pm for room/board isn't enough.

You shouldn't be struggling while housing and caring for them while they build up significant savings and/or have lots of spending money. But having said that, you should help them make the most of their money - making sure their needs are met, they are contributing towards a pension and that they have access to money for personal spending.

neither children have any saving as they are both on UC due to disabilities. £250 doesn't sound a lot but it is all they can afford as they both pay for other things like a carer.

would I be taxed on the first 25% is I use that. That should be enough to clear the debt and pay part of the mortgage?

You can get free pension advice from Money wise. It might be as well to look at why you're making AVCs when you're struggling at the moment month to month. I'd be wary of doing anything without professional input.

Could you not get help with adaptations through OH? Might be worth considering in the future.

I think you mean OT occupational health.
I wondered this too.
A neighbour needed adaptations including a banister on the stairs and these were supplied and fitted through community services.
Also handrails and built up loo seat with support handles. All free.
Also later a riser recliner chair electric powered.

Occupational Therapy

OT should be doing adaptations for you, you can get wet room, stair lift etc in a grant. It can take a while to get the visit and work done but worth the wait. Talk to cab re what financial helps available.

They paid for some things but not others. so we had a wet room for example but no bed hoist or specialised bed which I then had to buy. The thinking was I could assist her. The issue with that is I work full time so she was stuck in bed for long periods of time. Because she could walk sometimes, she was not eligible for a NHS wheelchair....things like that. As her condition has become worse, I have had to buy mobility aids etc. also private prescriptions.

It has been a nightmare really and I just feel totally exhausted by it all. There really isn't as much support as people think out there. Budget cuts in local government mean if you have family support, you get less. sad but true.

I make AVC because frankly, I can't imagine working until I am 67. The last few years have taken their toll on my physical health and I am not sure I can care for them both and work til then.