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dip into pension to pay mortgage

  • 10-09-2011 7:04pm
    #1
    El chapucero
    Registered Users, Registered Users 2 Posts: 19 ✭


    Why can't people take their pension to clear off some of the mortgage on a family home ? A person with 20 years to go in a pension scheme may have the pension money in passive equity funds which are not growing and can fall rapidly with the market turblence. Pension funds can disappear. The mortgage doesn't.
    If the money is in cash then it doesn't grow and the government is raiding it.What good is it to have money for retirement if you are losing the house above your head today?
    Let the family home mortgage holders who are lucky enough to have some pension money take that pension money to pay off some mortgage and save interest.


Comments

  • #2
    thebman
    Closed Accounts Posts: 10,012 ✭✭✭✭thebman


    Pension money is invested in the long term so the companies you have your pension invested with would lose out and need to be compensated if the government allowed this to happen as it isn't really part of any pension scheme at present. You can choose to not pay your pension for a while (well with most pensions, not really public sector ones I imagine).


  • #3
    El chapucero
    Registered Users, Registered Users 2 Posts: 19 ✭El chapucero


    A person could have 100k already in a pension with New Ireland Assurance in a passively managed equity fund.
    The same person could owe say 200k in a mortgage to Bank of Ireland who control New Ireland Asaurance.
    The pension is risky and if it is in cash then it is diminishing with levies etc whereas the mortgage interest is rising.
    Give the Bank the money ,maybe pay some tax, clear a lump off the mortgage and sleep easier not having to worry about the pension disappearing in some stock market crash.


  • #4
    thebman
    Closed Accounts Posts: 10,012 ✭✭✭✭thebman


    But the bank is expecting the pension to perform to a certain level over its lifetime and is expecting the mortgage to perform to a certain level over the lifetime.

    So most likely they couldn't allow this as it would massively harm their books and we'd end up re-capitalizing them again.


  • #5
    El chapucero
    Registered Users, Registered Users 2 Posts: 19 ✭El chapucero


    But some of these pension funds are not performing anyway and the bank needs cash now to make their own investments etc. If it were at all possible then the pension money would be invested in the family home which could be sold at retirement to provide funds.

    Really the pension money is needed now.


  • #6
    COYW
    Closed Accounts Posts: 2,930 ✭✭✭COYW


    You are assuming that these people have pensions!


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  • #7
    paul71
    Registered Users, Registered Users 2 Posts: 3,325 ✭✭✭paul71


    If you dip into your pension fund you would be taxed on the amount you withdraw.


  • #8
    dvpower
    Closed Accounts Posts: 9,183 ✭✭✭dvpower


    If you took €100k out of a pension fund (and the contributions were deductable at the higher rate), you'd only get c.€50k to pay off the mortgage.
    Not such a good investment.


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