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Retirement and debt

Pensions, debt and your savings

If you have savings in a personal or workplace pension, you may be able to access a lump sum of money from this before retirement, usually when you turn 55. But should you use your pension to repay your debts?

In the past, most people could take up to 25% of their pension fund as a tax-free cash lump sum. But from April 2015 this changed. Many people now find that they can take out their whole pension in cash before they even retire.

Are you claiming a pension and struggling with debt?

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Can I use my pension to repay debts?

If you've been struggling with problem debt and you're approaching the age where you could draw a lump sum of money from your pension, this may seem like a quick way to pay off your debts.

This might be a good idea for some people, but for others it may mean you have less available for your retirement. Money you take from your pension at 55 could leave you with a lower monthly income for the rest of your life.

We can give you expert help to deal with your debts, but you need a different kind of help to make decisions about your pension. It's important you get guidance from a pension expert before you decide what to do with your pension savings.

Where can I get help with pensions?

There are two types of guidance available about pensions, depending on what help you need.

Regulated financial advice

This help is given by an independent financial advisor (IFA). An IFA is qualified to give you advice about your own circumstances and recommend the best course of action for you. They can also recommend specific types of annuity or investment product. In most cases you will need to pay for an IFA's services.

The Money Advice Service (MAS) has a guide to choosing a financial advisor on their website which includes links to other sites to help you find a local IFA. Alternatively you can call MAS on 0300 500 5000 (Mon-Fri 8am-8pm, Sat 9am-1pm)

General pension information

This is impartial information provided by Government-backed organisations. This help is available free from:

These organisations can give you all the facts you need to make your own decisions about your pension. But they can’t tell you what is the best course of action and they can't recommend specific products or investments.

Free and confidential debt advice

We can help if you're finding it difficult to pay your debts on your pension. Our online advice tool Debt Remedy can help you find a solution in around 20 minutes. We also have a team of friendly advisors who give free debt advice over the telephone. 

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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